Note 3.

Segment Information

We classify our business into one corporate segment and two underwriting segments, Insurance Companies and Lloyd’s Operations. Management takes into consideration a wide range of factors in planning the business strategy of the Company and evaluating the results of its operations. The performance of each underwriting segment is based on their underwriting and GAAP results. Underwriting results are measured based on underwriting profit or loss and the related combined ratio, which are both non-GAAP measures of underwriting profitability. Underwriting profit or loss is calculated from net earned premiums, less the sum of net losses and LAE, commission expenses, other operating expenses and other income or expense. The combined ratio is derived by dividing the sum of net losses and LAE, commission expenses, other operating expenses and other underwriting (expense) by net earned premiums. A combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss. Each segment maintains its own investments on which it earns income and realizes capital gains or losses. Each segment’s underwriting performance is evaluated separately from the performance of its investment portfolio. The Corporate segment’s results consist of the Parent Company’s investment income, interest expense and related income taxes.

Access to capital also has a significant impact on management’s outlook for the operations. The Insurance Companies’ operations and ability to grow their business and take advantage of market opportunities are constrained by regulatory capital requirements and rating agency assessments of capital adequacy. Similarly, the ability to grow the Lloyd’s Operations is subject to capital and operating requirements of the Lloyd’s and UK regulatory authorities.

The accounting policies used to prepare the segment reporting data for the Company’s segments are the same as those described in the Summary of Significant Accounting Policies in Footnote 1.

Financial data by segment for the years ended December 31, 2014, 2013, and 2012 were as follows:


	Year Ended December 31, 2014
In thousands	Insurance Companies			Lloyd’s Operations			Corporate⁽¹⁾			Total
Gross written premiums	$	1,045,454		$	386,899		$	—		$	1,432,353
Net written premiums		752,773			247,365			—			1,000,138

Net earned premiums		704,574			231,321			—			935,895
Net losses and loss adjustment expenses		(434,396	)		(110,833	)		—			(545,229	)
Commission expenses		(85,137	)		(42,558	)		2,167			(125,528	)
Other operating expenses		(138,675	)		(58,150	)		—			(196,825	)
Other underwriting income (expense)		2,727			35			(2,167	)		595


Underwriting profit (loss)	$	49,093		$	19,815		$	—		$	68,908

Net investment income		56,714			7,378			76			64,168
Net realized gains (losses)		12,715			97			—			12,812
Call premium on Senior Notes		—			—			—			—
Interest expense		—			—			(15,413	)		(15,413	)
Other income (expense)		(2,182	)		12,243			—			10,061

Income (loss) before income taxes	$	116,340		$	39,533		$	(15,337	)	$	140,536

Income tax expense (benefit)		36,609			13,885			(5,287	)		45,207

Net income (loss)	$	79,731		$	25,648		$	(10,050	)	$	95,329


Identifiable assets	$	3,344,084		$	957,795		$	162,297		$	4,464,176


Losses and loss adjustment expenses ratio		61.7	%		47.9	%					58.3	%
Commission expense ratio		12.1	%		18.4	%					13.4	%
Other operating expense ratio ⁽²⁾		19.2	%		25.1	%					20.9	%

Combined ratio		93.0	%		91.4	%					92.6	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other operating expenses and Other underwriting income (expenses).


	Year Ended December 31, 2013
In thousands	Insurance Companies			Lloyd’s Operations			Corporate⁽¹⁾			Total
Gross written premiums	$	1,002,275		$	368,242		$	—		$	1,370,517
Net written premiums		680,008			207,914			—			887,922

Net earned premiums		639,338			202,601			—			841,939
Net losses and loss adjustment expenses		(415,413	)		(103,548	)		—			(518,961	)
Commission expenses		(81,132	)		(34,710	)		2,348			(113,494	)
Other operating expenses		(119,920	)		(44,514	)		—			(164,434	)
Other income (expense)		2,764			(1,588	)		(2,348	)		(1,172	)


Underwriting profit (loss)	$	25,637		$	18,241		$	—		$	43,878

Net investment income		49,083			7,160			8			56,251
Net realized gains (losses)		20,600			(58	)		4			20,546
Call premium on Senior Notes		—			—			(17,895	)		(17,895	)
Interest expense		—			—			(10,507	)		(10,507	)

Income (loss) before income taxes	$	95,320		$	25,343		$	(28,390	)	$	92,273

Income tax expense (benefit)		29,965			8,728			(9,886	)		28,807

Net income (loss)	$	65,355		$	16,615		$	(18,504	)	$	63,466


Identifiable assets	$	3,077,437		$	930,567		$	161,448		$	4,169,452


Losses and loss adjustment expenses ratio		65.0	%		51.1	%					61.6	%
Commission expense ratio		12.7	%		17.1	%					13.5	%
Other operating expense ratio ⁽²⁾		18.3	%		22.8	%					19.7	%

Combined ratio		96.0	%		91.0	%					94.8	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other operating expenses and Other income.


	Year Ended December 31, 2012
In thousands	Insurance Companies			Lloyd’s Operations			Corporate⁽¹⁾			Total
Gross written premiums	$	921,325		$	365,140		$	—		$	1,286,465
Net written premiums		622,956			210,699			—			833,655

Net earned premiums		571,439			210,525			—			781,964
Net losses and loss adjustment expenses		(417,082	)		(80,351	)		—			(497,433	)
Commission expenses		(81,370	)		(42,449	)		2,349			(121,470	)
Other operating expenses		(113,625	)		(45,454	)		—			(159,079	)
Other income (expense)		3,790			47			(2,349	)		1,488


Underwriting profit (loss)	$	(36,848	)	$	42,318		$	—		$	5,470

Net investment income		46,549			7,551			148			54,248
Net realized gains (losses)		36,468			3,555			193			40,216
Interest expense		—			—			(8,198	)		(8,198	)

Income (loss) before income taxes	$	46,169		$	53,424		$	(7,857	)	$	91,736

Income tax expense (benefit)		12,686			18,620			(3,332	)		27,974

Net income (loss)	$	33,483		$	34,804		$	(4,525	)	$	63,762


Identifiable assets	$	3,036,489		$	928,448		$	42,733		$	4,007,670


Losses and loss adjustment expenses ratio		73.0	%		38.2	%					63.6	%
Commission expense ratio		14.2	%		20.2	%					15.5	%
Other operating expense ratio ⁽²⁾		19.2	%		21.5	%					20.2	%

Combined ratio		106.4	%		79.9	%					99.3	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other operating expenses and Other income.

The following tables provide additional financial data by segment for the years ended December 31, 2014, 2013 and 2012:


	Year Ended December 31, 2014
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	177,363	$	188,107	$	365,470
Property casualty		755,059		126,016		881,075
Professional liability		113,032		72,776		185,808

Total	$	1,045,454	$	386,899	$	1,432,353


Net written premiums:
Marine	$	123,617	$	144,327	$	267,944
Property casualty		554,844		55,917		610,761
Professional liability		74,312		47,121		121,433

Total	$	752,773	$	247,365	$	1,000,138


Net earned premiums:
Marine	$	123,203	$	141,471	$	264,674
Property casualty		496,209		51,338		547,547
Professional liability		85,162		38,512		123,674

Total	$	704,574	$	231,321	$	935,895


	Year Ended December 31, 2013
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	171,822	$	181,046	$	352,868
Property casualty		700,087		129,522		829,609
Professional liability		130,366		57,674		188,040

Total	$	1,002,275	$	368,242	$	1,370,517


Net written premiums:
Marine	$	119,837	$	134,627	$	254,464
Property casualty		462,942		42,334		505,276
Professional liability		97,229		30,953		128,182

Total	$	680,008	$	207,914	$	887,922


Net earned premiums:
Marine	$	129,276	$	138,690	$	267,966
Property casualty		409,480		37,722		447,202
Professional liability		100,582		26,189		126,771

Total	$	639,338	$	202,601	$	841,939


	Year Ended December 31, 2012
In thousands	Insurance Companies		Lloyd’s Operations		Total
Gross written premiums:
Marine	$	200,095	$	194,423	$	394,518
Property casualty		590,741		127,028		717,769
Professional liability		130,489		43,689		174,178

Total	$	921,325	$	365,140	$	1,286,465


Net written premiums:
Marine	$	133,210	$	143,600	$	276,810
Property casualty		390,168		43,824		433,992
Professional liability		99,578		23,275		122,853

Total	$	622,956	$	210,699	$	833,655


Net earned premiums:
Marine	$	142,181	$	136,898	$	279,079
Property casualty		332,782		52,951		385,733
Professional liability		96,476		20,676		117,152

Total	$	571,439	$	210,525	$	781,964

The Insurance Companies net earned premiums include $37.7 million, $44.6 million and $63.9 million of net earned premiums from the U.K. Branch for 2014, 2013 and 2012, respectively.