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 months ended March 31, 2018 and 2017 was as follows:

	Three Months Ended March 31, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Net Earned Premiums	$	172,913		$	93,210		$	56,504		$	—		$	322,627
Net Losses and LAE		(110,422	)		(45,843	)		(29,880	)		—			(186,145	)
Commission Expenses		(20,861	)		(19,756	)		(13,768	)		233			(54,152	)
Other Operating Expenses		(36,991	)		(20,530	)		(5,405	)		—			(62,926	)
Other Underwriting Income (Expense)		98			—			138			(233	)		3
Underwriting Profit	$	4,737		$	7,081		$	7,589		$	—		$	19,407
Net Investment Income											23,702			23,702
Total Net Realized and Unrealized Losses											(2,012	)		(2,012	)
Interest Expense											(3,864	)		(3,864	)
Other Loss											(120	)		(120	)

Income Before Income Taxes	$	4,737		$	7,081		$	7,589		$	17,706		$	37,113
Income Tax Expense											(6,235	)		(6,235	)
Net Income													$	30,878

Losses and LAE Ratio		63.9	%		49.2	%		52.9	%					57.7	%
Commission Expense Ratio		12.1	%		21.2	%		24.4	%					16.8	%
Other Operating Expense Ratio ⁽²⁾		21.3	%		22.0	%		9.3	%					19.5	%
Combined Ratio		97.3	%		92.4	%		86.6	%					94.0	%

(1) - Includes Corporate segment intercompany eliminations.

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

	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
Total Net Realized and Unrealized 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	%

(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, 2018 and 2017 was as follows:

	Three Months Ended March 31, 2018									Three Months Ended March 31, 2017									% 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	$	41,724	$	(17,480	)	$	24,244	$	21,092	$	40,950	$	(17,520	)	$	23,430	$	22,694		1.9	%		(0.2	%)		3.5	%		(7.1	%)
P&C		168,193		(44,912	)		123,281		127,590		170,634		(38,198	)		132,436		119,123		(1.4	%)		17.6	%		(6.9	%)		7.1	%
Professional Liability		30,011		(4,189	)		25,822		24,231		26,021		(5,769	)		20,252		22,187		15.3	%		(27.4	%)		27.5	%		9.2	%
Total	$	239,928	$	(66,581	)	$	173,347	$	172,913	$	237,605	$	(61,487	)	$	176,118	$	164,004		1.0	%		8.3	%		(1.6	%)		5.4	%

Int'l Insurance
Marine	$	56,478	$	(8,054	)	$	48,424	$	39,279	$	68,833	$	(10,926	)	$	57,907	$	37,495		(17.9	%)		(26.3	%)		(16.4	%)		4.8	%
P&C		33,960		(13,667	)		20,293		21,769		40,368		(29,646	)		10,722		22,180		(15.9	%)		(53.9	%)		89.3	%		(1.9	%)
Professional Liability		37,434		(7,167	)		30,267		32,162		32,659		(6,021	)		26,638		24,411		14.6	%		19.0	%		13.6	%		31.8	%
Total	$	127,872	$	(28,888	)	$	98,984	$	93,210	$	141,860	$	(46,593	)	$	95,267	$	84,086		(9.9	%)		(38.0	%)		3.9	%		10.9	%

GlobalRe	$	127,424	$	(6,493	)	$	120,931	$	56,504	$	70,840	$	(5,062	)	$	65,778	$	38,041		79.9	%		28.3	%		83.8	%		48.5	%

Total	$	495,224	$	(101,962	)	$	393,262	$	322,627	$	450,305	$	(113,142	)	$	337,163	$	286,131		10.0	%		(9.9	%)		16.6	%		12.8	%