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, Int’l Insurance, 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 2015 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 Net investment income, Net realized gains (losses), Interest expense, 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 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 following tables set forth the financial data by segment for the years ended December 31, 2015, 2014 and 2013:

	Year Ended December 31, 2015
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net earned premiums	$	555,836		$	259,960		$	168,291		$	—		$	984,087
Net losses and LAE		(343,497	)		(134,702	)		(94,399	)		—			(572,598	)
Commission expenses		(56,319	)		(43,676	)		(32,240	)		2,258			(129,977	)
Other operating expenses		(131,407	)		(75,867	)		(16,242	)		—			(223,516	)
Other underwriting income (expense)		1,690			—			690			(2,258	)		122
Underwriting profit (loss)	$	26,303		$	5,715		$	26,100		$	—		$	58,118
Net investment income											68,718			68,718
Net realized gains (losses)											6,675			6,675
Interest expense											(15,424	)		(15,424	)
Other income (loss)											(613	)		(613	)

Income before income taxes	$	26,303		$	5,715		$	26,100		$	59,356		$	117,474
Income tax (expense) benefit											(36,417	)		(36,417	)
Net income (loss)													$	81,057

Losses and LAE ratio		61.8	%		51.8	%		56.1	%					58.2	%
Commission expense ratio		10.1	%		16.8	%		19.2	%					13.2	%
Other operating expense ratio ⁽²⁾		23.4	%		29.2	%		9.2	%					22.7	%
Combined ratio		95.3	%		97.8	%		84.5	%					94.1	%

(1) - Includes Corporate segment intercompany eliminations.

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

	Year Ended December 31, 2014
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net earned premiums	$	504,289		$	243,485		$	188,121		$	—		$	935,895
Net losses and LAE		(311,839	)		(115,079	)		(118,311	)		—			(545,229	)
Commission expenses		(49,840	)		(44,426	)		(33,429	)		2,167			(125,528	)
Other operating expenses		(115,817	)		(65,275	)		(15,733	)		—			(196,825	)
Other underwriting income (expense)		2,241			32			489			(2,167	)		595
Underwriting profit (loss)	$	29,034		$	18,737		$	21,137		$	—		$	68,908
Net investment income											64,168			64,168
Net realized gains (losses)											12,812			12,812
Interest expense											(15,413	)		(15,413	)
Other income (loss)											10,061			10,061

Income before income taxes	$	29,034		$	18,737		$	21,137		$	71,628		$	140,536
Income tax (expense) benefit											(45,207	)		(45,207	)
Net income (loss)													$	95,329

Losses and LAE ratio		61.8	%		47.3	%		62.9	%					58.3	%
Commission expense ratio		9.9	%		18.2	%		17.8	%					13.4	%
Other operating expense ratio ⁽²⁾		22.5	%		26.8	%		8.1	%					20.9	%
Combined ratio		94.2	%		92.3	%		88.8	%					92.6	%

(1) - Includes Corporate segment intercompany eliminations.

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

	Year Ended December 31, 2013
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net earned premiums	$	437,737		$	232,962		$	171,240		$	—		$	841,939
Net losses and LAE		(283,694	)		(103,853	)		(131,414	)		—			(518,961	)
Commission expenses		(43,409	)		(42,977	)		(29,456	)		2,348			(113,494	)
Other operating expenses		(99,013	)		(54,062	)		(11,359	)		—			(164,434	)
Other underwriting income (expense)		2,924			(1,867	)		119			(2,348	)		(1,172	)
Underwriting profit (loss)	$	14,545		$	30,203		$	(870	)	$	—		$	43,878
Net investment income											56,251			56,251
Net realized gains (losses)											20,546			20,546
Interest expense											(10,507	)		(10,507	)
Call premium on Senior notes											(17,895	)		(17,895	)
Other income (loss)											—			—

Income (loss) before income taxes	$	14,545		$	30,203		$	(870	)	$	48,395		$	92,273
Income tax (expense) benefit											(28,807	)		(28,807	)
Net income (loss)													$	63,466

Losses and LAE ratio		64.8	%		44.6	%		76.7	%					61.6	%
Commission expense ratio		9.9	%		18.4	%		17.2	%					13.5	%
Other operating expense ratio ⁽²⁾		22.0	%		24.0	%		6.6	%					19.7	%
Combined ratio		96.7	%		87.0	%		100.5	%					94.8	%

(1) - Includes Corporate segment intercompany eliminations.

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

The following tables provide additional financial data by operating segment for the years ended December 31, 2015, 2014 and 2013:

	Year Ended December 31, 2015
amounts in thousands	Gross written premiums		Ceded written premiums			Net written premiums		Net earned premiums
U.S. Insurance
Marine	$	158,124	$	(61,916	)	$	96,208	$	96,082
P&C		596,673		(152,168	)		444,505		401,408
Professional Liability		110,984		(54,691	)		56,293		58,346
Total	$	865,781	$	(268,775	)	$	597,006	$	555,836

Int'l Insurance
Marine	$	183,707	$	(36,515	)	$	147,192	$	149,256
P&C		130,729		(67,722	)		63,007		55,320
Professional Liability		97,511		(29,768	)		67,743		55,384
Total	$	411,947	$	(134,005	)	$	277,942	$	259,960

GlobalRe	$	175,774	$	(6,862	)	$	168,912	$	168,291

Total	$	1,453,502	$	(409,642	)	$	1,043,860	$	984,087

	Year Ended December 31, 2014
amounts in thousands	Gross written premiums		Ceded written premiums			Net written premiums		Net earned premiums
U.S. Insurance
Marine	$	154,233	$	(46,685	)	$	107,548	$	105,650
P&C		543,045		(169,953	)		373,092		314,833
Professional Liability		109,830		(38,345	)		71,485		83,806
Total	$	807,108	$	(254,983	)	$	552,125	$	504,289

Int'l Insurance
Marine	$	190,787	$	(47,805	)	$	142,982	$	141,097
P&C		158,139		(98,087	)		60,052		62,520
Professional Liability		75,978		(26,029	)		49,949		39,868
Total	$	424,904	$	(171,921	)	$	252,983	$	243,485

GlobalRe	$	200,341	$	(5,311	)	$	195,030	$	188,121

Total	$	1,432,353	$	(432,215	)	$	1,000,138	$	935,895

	Year Ended December 31, 2013
amounts in thousands	Gross written premiums		Ceded written premiums			Net written premiums		Net earned premiums
U.S. Insurance
Marine	$	143,867	$	(44,359	)	$	99,508	$	106,150
P&C		472,049		(202,430	)		269,619		231,186
Professional Liability		130,079		(32,980	)		97,099		100,401
Total	$	745,995	$	(279,769	)	$	466,226	$	437,737

Int'l Insurance
Marine	$	192,870	$	(50,887	)	$	141,983	$	150,784
P&C		180,657		(120,068	)		60,589		55,809
Professional Liability		57,961		(26,877	)		31,084		26,369
Total	$	431,488	$	(197,832	)	$	233,656	$	232,962

GlobalRe	$	193,034	$	(4,994	)	$	188,040	$	171,240

Total	$	1,370,517	$	(482,595	)	$	887,922	$	841,939

The following table presents identifiable assets by legal entity as we do not allocate assets under the new reporting segments:

	Years ended December 31,
amounts in thousands	2015		2014
Identifiable assets:
NIC, NSIC and Navigators Management Company, Inc.	$	3,455,586	$	3,356,093
NHUK		996,242		957,795
Parent Company ⁽¹⁾		132,184		162,297
Total identifiable assets	$	4,584,012	$	4,476,185

(1) - Includes Corporate segment intercompany eliminations.