Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

8. Segment Information

The Company’s primary business operations include insurance products and services provided through four operating segments: Core Commercial, Specialty, Personal Lines and Other. Core Commercial includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial lines coverages provided to small and mid-sized businesses. Specialty includes four divisions of business: Professional and Executive Lines, Specialty Property and Casualty (“Specialty P&C”), Marine, and Surety and Other. Specialty P&C includes coverages such as program business (provides commercial insurance to markets with specialized coverage or risk management needs related to groups of similar businesses), specialty industrial and commercial property, and excess and surplus lines. Personal Lines includes personal automobile, homeowners and other personal coverages. Included in the Other segment are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations; earnings on holding company assets; holding company and other expenses, including certain costs associated with retirement benefits due to the Company’s former life insurance employees and agents; and run-off voluntary assumed property and casualty pools and run-off direct asbestos and environmental businesses. During the first quarter of 2022, the Company disaggregated its former Commercial Lines segment into the aforementioned Core Commercial and Specialty segments. Prior periods reflect this new presentation. This presentation is consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company reports interest expense related to debt separately from the earnings of its operating segments. This consists primarily of interest on the Company’s senior and subordinated debentures.

Management evaluates the results of the aforementioned segments based on operating income before income taxes, excluding interest expense on debt. Operating income before income taxes excludes certain items which are included in net income, such as net realized and unrealized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before income taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before interest expense and income taxes may be important components in understanding and assessing the Company’s overall financial performance, management believes that the presentation of operating income before interest expense and income taxes enhances an investor’s understanding of the Company’s results of operations by highlighting net income attributable to the core operations of the business. However, operating income before income taxes should not be construed as a substitute for income before income taxes or income from continuing operations, and operating income should not be construed as a substitute for net income.

Summarized below is financial information with respect to the Company’s business segments.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2022			2021			2022			2021
Operating revenues:
Core Commercial	$	527.1		$	497.6		$	1,551.8		$	1,453.9
Specialty		319.9			256.4			931.0			804.1
Personal Lines		560.5			512.6			1,635.4			1,506.3
Other		3.7			4.3			10.4			12.4
Total		1,411.2			1,270.9			4,128.6			3,776.7
Net realized and unrealized investment gains (losses)		(44.9	)		4.0			(138.7	)		72.6
Total revenues	$	1,366.3		$	1,274.9		$	3,989.9		$	3,849.3
Operating income before interest expense and income taxes:
Core Commercial:
Underwriting income (loss)	$	(7.7	)	$	(25.7	)	$	58.8		$	(41.9	)
Net investment income		33.4			37.0			101.4			108.9
Other expense		(0.5	)		(0.3	)		(0.6	)		(0.9	)
Core Commercial operating income		25.2			11.0			159.6			66.1
Specialty:
Underwriting income		32.0			15.5			96.2			36.2
Net investment income		15.2			15.9			46.2			46.8
Other expense		(0.3	)		—			(0.3	)		(0.1	)
Specialty operating income		46.9			31.4			142.1			82.9
Personal Lines:
Underwriting income (loss)		(42.7	)		(20.3	)		(50.3	)		48.1
Net investment income		21.4			22.6			64.6			66.5
Other income		2.5			1.3			6.0			3.0
Personal Lines operating income (loss)		(18.8	)		3.6			20.3			117.6
Other:
Underwriting loss		—			(0.4	)		—			(1.0	)
Net investment income		3.0			3.3			8.2			9.0
Other expense		(2.4	)		(1.9	)		(6.9	)		(5.2	)
Other operating income		0.6			1.0			1.3			2.8
Operating income before interest expense and income taxes		53.9			47.0			323.3			269.4
Interest on debt		(8.5	)		(8.5	)		(25.5	)		(25.5	)
Operating income before income taxes		45.4			38.5			297.8			243.9
Non-operating items:
Net realized and unrealized investment gains (losses)		(44.9	)		4.0			(138.7	)		72.6
Other non-operating		—			—			(0.4	)		—
Income from continuing operations before income taxes	$	0.5		$	42.5		$	158.7		$	316.5

The following table provides identifiable assets for the Company’s business segments and discontinued operations:

(in millions)	September 30, 2022		December 31, 2021
Property and Casualty	$	13,649.7	$	14,147.2
Assets of discontinued businesses		96.2		107.1
Total	$	13,745.9	$	14,254.3

The Company reviews the assets of its insurance companies collectively and does not allocate them between the Core Commercial, Specialty, Personal Lines and Other segments.