Segment Information

3 Months Ended

Mar. 31, 2023

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 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, which provides commercial insurance to markets with specialized coverage or risk management needs related to groups of similar businesses, specialty industrial and commercial property, excess and surplus lines and specialty general liability coverage. 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.

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 its 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 (loss), 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 (loss) 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 (loss) from continuing operations, and operating income should not be construed as a substitute for net income (loss).

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

	Three Months Ended
	March 31,
(in millions)	2023			2022
Operating revenues:
Core Commercial	$	544.7		$	511.1
Specialty		330.5			301.3
Personal Lines		587.8			530.7
Other		3.7			3.5
Total		1,466.7			1,346.6
Net realized and unrealized investment losses		(23.0	)		(15.9	)
Total revenues	$	1,443.7		$	1,330.7
Operating income before interest expense and income taxes:
Core Commercial:
Underwriting income (loss)	$	(24.8	)	$	32.2
Net investment income		36.1			35.4
Other expense		(0.1	)		(0.1	)
Core Commercial operating income		11.2			67.5
Specialty:
Underwriting income		30.7			33.9
Net investment income		17.0			16.2
Other income (expense)		0.6			(0.1	)
Specialty operating income		48.3			50.0
Personal Lines:
Underwriting income (loss)		(72.2	)		12.3
Net investment income		22.6			22.6
Other income		3.0			1.4
Personal Lines operating income (loss)		(46.6	)		36.3
Other:
Underwriting income		—			—
Net investment income		3.0			2.7
Other expense		(2.7	)		(2.1	)
Other operating income		0.3			0.6
Operating income before interest expense and income taxes		13.2			154.4
Interest on debt		(8.5	)		(8.5	)
Operating income before income taxes		4.7			145.9
Non-operating items:
Net realized and unrealized investment losses		(23.0	)		(15.9	)
Other non-operating		0.8			—
Income (loss) from continuing operations before income taxes	$	(17.5	)	$	130.0

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

(in millions)	March 31, 2023		December 31, 2022
Property and Casualty	$	14,004.3	$	13,911.0
Assets of discontinued businesses		87.4		84.1
Total	$	14,091.7	$	13,995.1

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