Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

NOTE 2.  SEGMENT INFORMATION

We report our results of operations consistent with the manner in which our Chief Operating Decision Maker reviews the business to assess performance through our reporting segments: U.S. Insurance, International Insurance (“Int’l Insurance”), Global Reinsurance (“GlobalRe”) and Corporate. 

We classify our business into three underwriting segments: U.S. Insurance, Int’l Insurance and GlobalRe.  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 measures of underwriting profitability.   Underwriting profit (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. We do not allocate our assets by underwriting segment, with the exception of goodwill and other intangible assets, as we evaluate the underwriting results of these segments separately from the results of our investments portfolio.

Financial data by segment for the three months ended March 31, 2017 and 2016 was as follows:

	Three Months Ended March 31, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Net earned premiums	$	164,004		$	84,086		$	38,041		$	—		$	286,131
Net losses and LAE		(98,826	)		(50,705	)		(20,069	)		—			(169,600	)
Commission expenses		(20,384	)		(19,233	)		(8,492	)		265			(47,844	)
Other operating expenses		(33,472	)		(19,793	)		(5,273	)		—			(58,538	)
Other underwriting income (expense)		110			—			176			(265	)		21
Underwriting profit (loss)	$	11,432		$	(5,645	)	$	4,383		$	—		$	10,170
Net investment income											21,448			21,448
Net realized losses											(44	)		(44	)
Interest expense											(3,861	)		(3,861	)
Other income											1,047			1,047
Income (loss) before income taxes	$	11,432		$	(5,645	)	$	4,383		$	18,590		$	28,760
Income tax expense											(7,650	)		(7,650	)
Net income													$	21,110
Losses and LAE ratio		60.3	%		60.3	%		52.8	%					59.3	%
Commission expense ratio		12.4	%		22.9	%		22.3	%					16.7	%
Other operating expense ratio (2)		20.3	%		23.5	%		13.4	%					20.4	%
Combined ratio		93.0	%		106.7	%		88.5	%					96.4	%
Goodwill and other intangible assets	$	2,534		$	3,908		$	—					$	6,442

(1) - Includes Corporate segment intercompany eliminations.

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

	Three Months Ended March 31, 2016
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Net earned premiums	$	148,340		$	78,008		$	38,010		$	—		$	264,358
Net losses and LAE		(91,512	)		(40,410	)		(21,034	)		—			(152,956	)
Commission expenses		(14,855	)		(15,355	)		(7,745	)		401			(37,554	)
Other operating expenses		(33,761	)		(21,771	)		(5,277	)		—			(60,809	)
Other underwriting income (expense)		361			—			49			(401	)		9
Underwriting profit	$	8,573		$	472		$	4,003		$	—		$	13,048
Net investment income											19,594			19,594
Net realized gains											1,597			1,597
Interest expense											(3,858	)		(3,858	)
Other income											2,540			2,540
Income before income taxes	$	8,573		$	472		$	4,003		$	19,873		$	32,921
Income tax expense											(9,989	)		(9,989	)
Net income													$	22,932
Losses and LAE ratio		61.7	%		51.8	%		55.3	%					57.9	%
Commission expense ratio		10.0	%		19.7	%		20.4	%					14.2	%
Other operating expense ratio (2)		22.5	%		27.9	%		13.8	%					23.0	%
Combined ratio		94.2	%		99.4	%		89.5	%					95.1	%
Goodwill and other intangible assets	$	2,534		$	4,212		$	—					$	6,746

(1) - Includes Corporate segment intercompany eliminations.

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

Revenue by operating segment for the three months ended March 31, 2017 and 2016 was as follows:

	Three Months Ended March 31, 2017									Three Months Ended March 31, 2016									% Change
amounts in thousands	Gross written premiums		Ceded written premiums			Netwritten 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	$	40,950	$	(17,520	)	$	23,430	$	22,694	$	43,163	$	(17,647	)	$	25,516	$	23,250		(5.1	%)		(0.7	%)		(8.2	%)		(2.4	%)
P&C		170,634		(38,198	)		132,436		119,123		141,278		(30,507	)		110,771		109,159		20.8	%		25.2	%		19.6	%		9.1	%
ProfessionalLiability		26,021		(5,769	)		20,252		22,187		26,206		(6,343	)		19,863		15,931		(0.7	%)		(9.0	%)		2.0	%		39.3	%
Total	$	237,605	$	(61,487	)	$	176,118	$	164,004	$	210,647	$	(54,497	)	$	156,150	$	148,340		12.8	%		12.8	%		12.8	%		10.6	%
Int'l Insurance
Marine	$	68,833	$	(10,926	)	$	57,907	$	37,495	$	71,948	$	(11,089	)	$	60,859	$	38,856		(4.3	%)		(1.5	%)		(4.9	%)		(3.5	%)
P&C		40,368		(29,646	)		10,722		22,180		44,046		(17,229	)		26,817		21,209		(8.4	%)		72.1	%		(60.0	%)		4.6	%
Professional Liability		32,659		(6,021	)		26,638		24,411		28,149		(6,653	)		21,496		17,943		16.0	%		(9.5	%)		23.9	%		36.0	%
Total	$	141,860	$	(46,593	)	$	95,267	$	84,086	$	144,143	$	(34,971	)	$	109,172	$	78,008		(1.6	%)		33.2	%		(12.7	%)		7.8	%
GlobalRe	$	70,840	$	(5,062	)	$	65,778	$	38,041	$	59,087	$	(4,589	)	$	54,498	$	38,010		19.9	%		10.3	%		20.7	%		0.1	%
Total	$	450,305	$	(113,142	)	$	337,163	$	286,131	$	413,877	$	(94,057	)	$	319,820	$	264,358		8.8	%		20.3	%		5.4	%		8.2	%