Note 2.

Segment Information

During the first quarter of 2015, we realigned our reporting segments from Insurance Companies, Lloyd’s Operations and Corporate to U.S. Insurance, International Insurance (“Int’l Insurance”), Global Reinsurance (“GlobalRe”) and Corporate. The new segment presentation reflects an increase in the level of importance that the Chief Operating Decision Maker now places on the results of the underlying operating segments when aggregated and reported in alignment with the products and services offered to the marketplace versus when aggregated and reported in alignment with our legal entity structure. Over the past few years, we have been monitoring the growth and stability of our reinsurance business and in 2015 determined that reinsurance has become a stable and significant component of our Company. We are also increasing our focus on additional international insurance markets by establishing underwriting offices in Continental Europe. The offices were fully operational during our January renewal season. We considered these changes in conjunction with operating and reportable segments.

Our previously reported segments were consistent with our legal entity structure; however, our new reporting segments are now primarily reflective of where our business is written. We reclassified our international business from our previously reported Lloyd’s Operations segment to the Int’l Insurance segment. We also reclassified our non-Lloyd’s business written internationally (primarily business written by the U.K. Branch) into this segment and have excluded Assumed Reinsurance. Our new GlobalRe segment was previously reported within our U.S. Insurance and Lloyd’s Operations segments as Assumed Reinsurance. Our U.S. Insurance segment now excludes the U.K. Branch and Assumed Reinsurance. Our Corporate segment now includes investment income (loss), Interest income (loss), Other income (loss) primarily consisting of foreign exchange gain (loss) and Income tax (expense) benefit, which are not allocated to the U.S. Insurance, Int’l Insurance and GlobalRe segments (together, “underwriting segments”). We do not allocate assets under the new reporting segments, as it is impracticable to do so.

As noted above, we classify our business into three underwriting segments (U.S. Insurance, Int’l Insurance and GlobalRe) and a Corporate Segment. Both the U.S. Insurance and Int’l Insurance reporting segments are each comprised of three operating segments: Marine, P&C and Professional Liability.

We evaluate the performance of each of the underwriting segments based on underwriting 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 Loss Adjustment Expenses (“LAE”), Commission expenses, Other operating expenses and Other underwriting income (expense). The Combined ratio is derived by dividing the sum of Net losses and LAE, Commission expenses, Other operating expenses and Other underwriting income (expense) by Net earned premiums. A Combined ratio of less than 100% indicates an underwriting profit and greater than 100% indicates an underwriting loss. Our underwriting performance is evaluated separately from the rest of our operations. The performance of our investment portfolios, our liquidity and capital resource needs, our foreign currency exposure and our tax planning strategies are evaluated on a consolidated basis within our Corporate segment.

The accounting policies used to prepare the segment reporting data for our reportable segments are the same as those described in Note 1 and Note 3 of our Annual Report on Form 10-K for the year ended December 31, 2014. In addition, 2014 data presented in this Quarterly Report has been recast to align with the new segment reporting described above.

Financial data by segment for the three and six months ended June 30, 2015 and 2014 was as follows:


	Three Months Ended June 30, 2015
amounts in thousands	U.S. Insurance			Int’l Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net earned premiums	$	137,304		$	63,186		$	41,838		$	—		$	242,328
Net losses and LAE		(84,155	)		(32,363	)		(25,455	)		—			(141,973	)
Commission expenses		(12,275	)		(11,298	)		(8,039	)		132			(31,480	)
Other operating expenses		(31,374	)		(17,366	)		(4,049	)		—			(52,789	)
Other underwriting income (expense)		121			—			36			(132	)		25


Underwriting profit (loss)	$	9,621		$	2,159		$	4,331		$	—		$	16,111

Net investment income											16,595			16,595
Net realized gains (losses)											3,916			3,916
Interest expense											(3,856	)		(3,856	)
Other income (loss)											(4,387	)		(4,387	)

Income before income taxes	$	9,621		$	2,159		$	4,331		$	12,268		$	28,379
Income tax (expense) benefit											(9,195	)		(9,195	)

Net income (loss)													$	19,184


Losses and LAE ratio		61.3	%		51.2	%		60.8	%					58.6	%
Commission expense ratio		8.9	%		17.9	%		19.2	%					13.0	%
Other operating expense ratio ⁽²⁾		22.8	%		27.5	%		9.6	%					21.8	%

Combined ratio		93.0	%		96.6	%		89.6	%					93.4	%

(1) - Includes Corporate segment intercompany eliminations.

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


	Three Months Ended June 30, 2014
amounts in thousands	U.S. Insurance			Int’l Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net earned premiums	$	125,254		$	59,661		$	46,169		$	—		$	231,084
Net losses and LAE		(73,131	)		(35,293	)		(31,796	)		—			(140,220	)
Commission expenses		(13,219	)		(11,009	)		(8,468	)		546			(32,150	)
Other operating expenses		(28,840	)		(15,436	)		(3,716	)		—			(47,992	)
Other underwriting income (expense)		736			11			34			(546	)		235


Underwriting profit (loss)	$	10,800		$	(2,066	)	$	2,223		$	—		$	10,957

Net investment income											15,648			15,648
Net realized gains (losses)											4,473			4,473
Interest expense											(4,319	)		(4,319	)
Other income (loss)											(1,900	)		(1,900	)

Income before income taxes	$	10,800		$	(2,066	)	$	2,223		$	13,902		$	24,859
Income tax (expense) benefit											(7,998	)		(7,998	)

Net income (loss)													$	16,861


Losses and LAE ratio		58.4	%		59.2	%		68.9	%					60.7	%
Commission expense ratio		10.6	%		18.5	%		18.3	%					13.9	%
Other operating expense ratio ⁽²⁾		22.4	%		25.8	%		8.0	%					20.7	%

Combined ratio		91.4	%		103.5	%		95.2	%					95.3	%

(1) - Includes Corporate segment intercompany eliminations.

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


	Six Months Ended June 30, 2015
amounts in thousands	U.S. Insurance			Int’l Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net earned premiums	$	268,395		$	128,711		$	81,354		$	—		$	478,460
Net losses and LAE		(161,954	)		(62,054	)		(48,163	)		—			(272,171	)
Commission expenses		(26,620	)		(22,711	)		(15,337	)		283			(64,385	)
Other operating expenses		(65,062	)		(34,375	)		(8,261	)		—			(107,698	)
Other underwriting income (expense)		317			—			46			(283	)		80


Underwriting profit (loss)	$	15,076		$	9,571		$	9,639		$	—		$	34,286

Net investment income											32,848			32,848
Net realized gains (losses)											9,512			9,512
Interest expense											(7,711	)		(7,711	)
Other income (loss)											(2,200	)		(2,200	)

Income (loss) before income taxes	$	15,076		$	9,571		$	9,639		$	32,449		$	66,735
Income tax (expense) benefit											(21,622	)		(21,622	)

Net income (loss)													$	45,113


Losses and LAE ratio		60.3	%		48.2	%		59.2	%					56.9	%
Commission expense ratio		9.9	%		17.6	%		18.9	%					13.5	%
Other operating expense ratio ⁽²⁾		24.2	%		26.8	%		10.1	%					22.4	%

Combined ratio		94.4	%		92.6	%		88.2	%					92.8	%

(1) - Includes Corporate segment intercompany eliminations.

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


	Six Months Ended June 30, 2014
amounts in thousands	U.S. Insurance			Int’l Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net earned premiums	$	240,444		$	121,715		$	94,197		$	—		$	456,356
Net losses and LAE		(146,095	)		(66,513	)		(62,679	)		—			(275,287	)
Commission expenses		(22,728	)		(19,864	)		(16,340	)		1,055			(57,877	)
Other operating expenses		(56,833	)		(30,495	)		(7,810	)		—			(95,138	)
Other underwriting income (expense)		1,249			17			179			(1,055	)		390


Underwriting profit (loss)	$	16,037		$	4,860		$	7,547		$	—		$	28,444

Net investment income											32,258			32,258
Net realized gains (losses)											5,306			5,306
Interest expense											(8,171	)		(8,171	)
Other income (loss)											8,344			8,344

Income (loss) before income taxes	$	16,037		$	4,860		$	7,547		$	37,737		$	66,181
Income tax (expense) benefit											(21,352	)		(21,352	)

Net income (loss)													$	44,829


Losses and LAE ratio		60.8	%		54.6	%		66.5	%					60.3	%
Commission expense ratio		9.5	%		16.3	%		17.3	%					12.7	%
Other operating expense ratio ⁽²⁾		23.0	%		25.1	%		8.2	%					20.8	%

Combined ratio		93.3	%		96.0	%		92.0	%					93.8	%

(1) - Includes Corporate segment intercompany eliminations.

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

Revenue by operating segment for the three and six months ended June 30, 2015 and 2014 was as follows:


	Three months ended June 30, 2015									Three months ended June 30, 2014									% Change
amounts in thousands	Gross written premiums		Ceded written premiums			Net written premiums		Net earned premiums		Gross written premiums		Ceded written premiums			Net written premiums		Net earned premiums		Gross written premiums			Ceded written premiums			Net written premiums			Net earned premiums
U.S. Insurance
Marine	$	41,803	$	(15,026	)	$	26,777	$	25,977	$	42,548	$	(11,587	)	$	30,961	$	26,727		-1.7	%		29.7	%		-13.5	%		-2.8	%
P&C		170,216		(49,305	)		120,911		96,440		137,137		(40,452	)		96,685		76,585		24.1	%		21.9	%		25.1	%		25.9	%
Professional Liability		27,968		(14,551	)		13,417		14,887		27,018		(7,965	)		19,053		21,942		3.5	%		82.7	%		-29.6	%		-32.2	%

Total		239,987		(78,882	)		161,105		137,304		206,703		(60,004	)		146,699		125,254		16.1	%		31.5	%		9.8	%		9.6	%

Int’l Insurance
Marine	$	41,432	$	(9,126	)	$	32,306	$	40,132	$	47,532	$	(17,033	)	$	30,499	$	34,177		-12.8	%		-46.4	%		5.9	%		17.4	%
P&C		41,615		(24,513	)		17,102		10,199		51,305		(31,284	)		20,021		16,466		-18.9	%		-21.6	%		-14.6	%		-38.1	%
Professional Liability		25,743		(7,982	)		17,761		12,855		21,895		(8,028	)		13,867		9,018		17.6	%		-0.6	%		28.1	%		42.5	%

Total		108,790		(41,621	)		67,169		63,186		120,732		(56,345	)		64,387		59,661		-9.9	%		-26.1	%		4.3	%		5.9	%

GlobalRe	$	30,694	$	(724	)	$	29,970	$	41,838	$	21,360	$	(582	)	$	20,778	$	46,169		43.7	%		24.4	%		44.2	%		-9.4	%

Total	$	379,471	$	(121,227	)	$	258,244	$	242,328	$	348,795	$	(116,931	)	$	231,864	$	231,084		8.8	%		3.7	%		11.4	%		4.9	%


	Six months ended June 30, 2015									Six months ended June 30, 2014									% Change
amounts in thousands	Gross written premiums		Ceded written premiums			Net written premiums		Net earned premiums		Gross written premiums		Ceded written premiums			Net written premiums		Net earned premiums		Gross written premiums			Ceded written premiums			Net written premiums			Net earned premiums
U.S. Insurance
Marine	$	82,638	$	(31,312	)	$	51,326	$	49,901	$	85,573	$	(20,757	)	$	64,816	$	54,713		-3.4	%		50.8	%		-20.8	%		-8.8	%
P&C		304,362		(88,863	)		215,499		187,175		262,256		(86,608	)		175,648		141,516		16.1	%		2.6	%		22.7	%		32.3	%
Professional Liability		52,314		(27,437	)		24,877		31,319		57,222		(17,705	)		39,517		44,215		-8.6	%		55.0	%		-37.0	%		-29.2	%

Total		439,314		(147,612	)		291,702		268,395		405,051		(125,070	)		279,981		240,444		8.5	%		18.0	%		4.2	%		11.6	%

Int’l Insurance
Marine	$	108,842	$	(19,948	)	$	88,894	$	77,924	$	109,514	$	(29,427	)	$	80,087	$	72,221		-0.6	%		-32.2	%		11.0	%		7.9	%
P&C		74,565		(40,642	)		33,923		26,233		93,555		(55,748	)		37,807		32,907		-20.3	%		-27.1	%		-10.3	%		-20.3	%
Professional Liability		47,810		(15,287	)		32,523		24,554		36,855		(13,752	)		23,103		16,587		29.7	%		11.2	%		40.8	%		48.0	%

Total		231,217		(75,877	)		155,340		128,711		239,924		(98,927	)		140,997		121,715		-3.6	%		-23.3	%		10.2	%		5.7	%

GlobalRe	$	105,400	$	(5,240	)	$	100,160	$	81,354	$	126,610	$	(3,874	)	$	122,736	$	94,197		-16.8	%		35.3	%		-18.4	%		-13.6	%

Total	$	775,931	$	(228,729	)	$	547,202	$	478,460	$	771,585	$	(227,871	)	$	543,714	$	456,356		0.6	%		0.4	%		0.6	%		4.8	%