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 as we evaluate the underwriting results of these segments separately from the results of our investments portfolio.

Financial data by segment for the three and six months ended June 30, 2017 and 2016 was as follows:

	Three Months Ended June 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net Earned Premiums	$	167,087		$	82,100		$	44,648		$	—		$	293,835
Net Losses and LAE		(105,270	)		(44,095	)		(27,745	)		—			(177,110	)
Commission Expenses		(20,460	)		(19,001	)		(8,970	)		258			(48,173	)
Other Operating Expenses		(33,140	)		(22,506	)		(5,120	)		—			(60,766	)
Other Underwriting Income (Expense)		100			—			169			(258	)		11
Underwriting Profit (Loss)	$	8,317		$	(3,502	)	$	2,982		$	—		$	7,797
Net Investment Income											22,265			22,265
Net Realized Gains											1,694			1,694
Interest Expense											(3,861	)		(3,861	)
Other Loss											(422	)		(422	)

Income (Loss) Before Income Taxes	$	8,317		$	(3,502	)	$	2,982		$	19,676		$	27,473
Income Tax Expense											(6,971	)		(6,971	)
Net Income													$	20,502

Losses and LAE Ratio		63.0	%		53.7	%		62.1	%					60.3	%
Commission Expense Ratio		12.2	%		23.1	%		20.1	%					16.4	%
Other Operating Expense Ratio ⁽²⁾		19.8	%		27.5	%		11.1	%					20.6	%
Combined Ratio		95.0	%		104.3	%		93.3	%					97.3	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Three Months Ended June 30, 2016
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net Earned Premiums	$	152,384		$	77,833		$	37,775		$	—		$	267,992
Net Losses and LAE		(93,428	)		(48,066	)		(25,712	)		—			(167,206	)
Commission Expenses		(16,894	)		(16,821	)		(7,492	)		481			(40,726	)
Other Operating Expenses		(31,570	)		(23,043	)		(4,461	)		—			(59,074	)
Other Underwriting Income (Expense)		342			—			203			(481	)		64
Underwriting Profit (Loss)	$	10,834		$	(10,097	)	$	313		$	—		$	1,050
Net Investment Income											19,875			19,875
Net Realized Gains											1,810			1,810
Interest Expense											(3,858	)		(3,858	)
Other Income											4,366			4,366

Income (Loss) Before Income Taxes	$	10,834		$	(10,097	)	$	313		$	22,193		$	23,243
Income Tax Expense											(7,053	)		(7,053	)
Net Income													$	16,190

Losses and LAE Ratio		61.3	%		61.8	%		68.1	%					62.4	%
Commission Expense Ratio		11.1	%		21.6	%		19.8	%					15.2	%
Other Operating Expense Ratio ⁽²⁾		20.5	%		29.6	%		11.3	%					22.0	%
Combined Ratio		92.9	%		113.0	%		99.2	%					99.6	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Six Months Ended June 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net Earned Premiums	$	331,091		$	166,186		$	82,689		$	—		$	579,966
Net Losses and LAE		(204,096	)		(94,800	)		(47,814	)		—			(346,710	)
Commission Expenses		(40,844	)		(38,234	)		(17,462	)		523			(96,017	)
Other Operating Expenses		(66,612	)		(42,299	)		(10,393	)		—			(119,304	)
Other Underwriting Income (Expense)		210			—			345			(523	)		32
Underwriting Profit (Loss)	$	19,749		$	(9,147	)	$	7,365		$	—		$	17,967
Net Investment Income											43,713			43,713
Net Realized Gains											1,650			1,650
Interest Expense											(7,722	)		(7,722	)
Other Income											625			625

Income (Loss) Before Income Taxes	$	19,749		$	(9,147	)	$	7,365		$	38,266		$	56,233
Income Tax Expense											(14,621	)		(14,621	)
Net Income													$	41,612

Losses and LAE Ratio		61.6	%		57.0	%		57.8	%					59.8	%
Commission Expense Ratio		12.3	%		23.0	%		21.1	%					16.6	%
Other Operating Expense Ratio ⁽²⁾		20.1	%		25.5	%		12.2	%					20.5	%
Combined Ratio		94.0	%		105.5	%		91.1	%					96.9	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Six Months Ended June 30, 2016
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net Earned Premiums	$	300,724		$	155,841		$	75,785		$	—		$	532,350
Net Losses and LAE		(184,940	)		(88,476	)		(46,746	)		—			(320,162	)
Commission Expenses		(31,749	)		(32,176	)		(15,237	)		882			(78,280	)
Other Operating Expenses		(65,331	)		(44,814	)		(9,738	)		—			(119,883	)
Other Underwriting Income (Expense)		703			—			252			(882	)		73
Underwriting Profit (Loss)	$	19,407		$	(9,625	)	$	4,316		$	—		$	14,098
Net Investment Income											39,469			39,469
Net Realized Gains											3,407			3,407
Interest Expense											(7,716	)		(7,716	)
Other Income											6,906			6,906

Income (Loss) Before Income Taxes	$	19,407		$	(9,625	)	$	4,316		$	42,066		$	56,164
Income Tax Expense											(17,042	)		(17,042	)
Net Income													$	39,122

Losses and LAE Ratio		61.5	%		56.8	%		61.7	%					60.1	%
Commission Expense Ratio		10.6	%		20.6	%		20.1	%					14.7	%
Other Operating Expense Ratio ⁽²⁾		21.4	%		28.8	%		12.5	%					22.6	%
Combined Ratio		93.5	%		106.2	%		94.3	%					97.4	%

(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, 2017 and 2016 was as follows:

	Three Months Ended June 30, 2017									Three Months Ended June 30, 2016									% 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	$	41,687	$	(19,451	)	$	22,236	$	21,812	$	46,187	$	(18,540	)	$	27,647	$	24,921		(9.7	%)		4.9	%		(19.6	%)		(12.5	%)
P&C		187,492		(51,147	)		136,345		121,226		168,654		(36,768	)		131,886		110,212		11.2	%		39.1	%		3.4	%		10.0	%
Professional Liability		28,007		(3,259	)		24,748		24,049		29,083		(7,310	)		21,773		17,251		(3.7	%)		(55.4	%)		13.7	%		39.4	%
Total	$	257,186	$	(73,857	)	$	183,329	$	167,087	$	243,924	$	(62,618	)	$	181,306	$	152,384		5.4	%		17.9	%		1.1	%		9.6	%

Int'l Insurance
Marine	$	49,597	$	(12,536	)	$	37,061	$	39,525	$	41,147	$	(9,554	)	$	31,593	$	36,096		20.5	%		31.2	%		17.3	%		9.5	%
P&C		46,663		(20,362	)		26,301		23,337		63,002		(24,465	)		38,537		23,815		(25.9	%)		(16.8	%)		(31.8	%)		(2.0	%)
Professional Liability		34,933		(10,911	)		24,022		19,238		31,591		(7,891	)		23,700		17,922		10.6	%		38.3	%		1.4	%		7.3	%
Total	$	131,193	$	(43,809	)	$	87,384	$	82,100	$	135,740	$	(41,910	)	$	93,830	$	77,833		(3.3	%)		4.5	%		(6.9	%)		5.5	%

GlobalRe	$	63,800	$	(1,231	)	$	62,569	$	44,648	$	32,901	$	(1,502	)	$	31,399	$	37,775		93.9	%		(18.1	%)		99.3	%		18.2	%

Total	$	452,179	$	(118,897	)	$	333,282	$	293,835	$	412,565	$	(106,030	)	$	306,535	$	267,992		9.6	%		12.1	%		8.7	%		9.6	%

	Six Months Ended June 30, 2017									Six Months Ended June 30, 2016									% 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	$	82,637	$	(36,971	)	$	45,666	$	44,506	$	89,350	$	(36,187	)	$	53,163	$	48,171		(7.5	%)		2.2	%		(14.1	%)		(7.6	%)
P&C		358,126		(89,345	)		268,781		240,349		309,932		(67,275	)		242,657		219,371		15.5	%		32.8	%		10.8	%		9.6	%
Professional Liability		54,028		(9,028	)		45,000		46,236		55,289		(13,653	)		41,636		33,182		(2.3	%)		(33.9	%)		8.1	%		39.3	%
Total	$	494,791	$	(135,344	)	$	359,447	$	331,091	$	454,571	$	(117,115	)	$	337,456	$	300,724		8.8	%		15.6	%		6.5	%		10.1	%

Int'l Insurance
Marine	$	118,430	$	(23,462	)	$	94,968	$	77,020	$	113,095	$	(20,643	)	$	92,452	$	74,952		4.7	%		13.7	%		2.7	%		2.8	%
P&C		87,031		(50,008	)		37,023		45,517		107,048		(41,694	)		65,354		45,024		(18.7	%)		19.9	%		(43.4	%)		1.1	%
Professional Liability		67,592		(16,932	)		50,660		43,649		59,740		(14,544	)		45,196		35,865		13.1	%		16.4	%		12.1	%		21.7	%
Total	$	273,053	$	(90,402	)	$	182,651	$	166,186	$	279,883	$	(76,881	)	$	203,002	$	155,841		(2.4	%)		17.6	%		(10.0	%)		6.6	%

GlobalRe	$	134,640	$	(6,293	)	$	128,347	$	82,689	$	91,988	$	(6,091	)	$	85,897	$	75,785		46.4	%		3.3	%		49.4	%		9.1	%

Total	$	902,484	$	(232,039	)	$	670,445	$	579,966	$	826,442	$	(200,087	)	$	626,355	$	532,350		9.2	%		16.0	%		7.0	%		8.9	%