Segment Reporting

12 Months Ended

Dec. 31, 2011

Segment Reporting [Abstract]

Segment Reporting

19.  SEGMENT REPORTING

During the quarter ended September 30, 2011, the Company realigned its reporting segments to reflect recent changes in the type and volume of business written. The Company previously reported the results of Marine & Aviation, Surety, Accident and Health ("A&H") Reinsurance and A&H Primary operations as a separate segment—Specialty Underwriting.  The A&H primary business, which is a relatively new line of business for the Company, has increased significantly, representing approximately 2% of premiums earned and is projected to continue to grow.  The A&H primary business is better aligned with the Insurance reporting segment based on the similarities of this business with those businesses already reflected in the Insurance segment.  The other operating units included in the Specialty Underwriting segment would have encompassed less than 5% of the Company's premiums earned and their volume is projected to remain less than 5%.  As a result of the size of these remaining operating units and their similarity to the business reported within U.S. Reinsurance, they have been reclassified to the U.S. Reinsurance segment.  There has been no change to the International and Bermuda reporting segments.  The Company has restated all segment information for prior years to conform to the new reporting segment structure.

The U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and A&H business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within the U.S.  The Insurance operation writes property and casualty insurance, including medical stop loss insurance, directly and through general agents, brokers and surplus lines brokers within the U.S. and Canada.  The International operation writes non-U.S. property and casualty reinsurance through Everest Re's branches in Canada and Singapore and through offices in Brazil, Miami and New Jersey. The Bermuda operation provides reinsurance and insurance to worldwide property and casualty markets and reinsurance to life insurers through brokers and directly with ceding companies from its Bermuda office and reinsurance to the United Kingdom and European markets through its UK branch and Ireland Re.

These segments are managed independently, but conform with corporate guidelines with respect to pricing, risk management, control of aggregate catastrophe exposures, capital, investments and support operations.  Management generally monitors and evaluates the financial performance of these operating segments based upon their underwriting results.

Underwriting results include earned premium less losses and LAE incurred, commission and brokerage expenses and other underwriting expenses.  Underwriting results are measured using ratios, in particular loss, commission and brokerage and other underwriting expense ratios, which, respectively, divide incurred losses, commissions and brokerage and other underwriting expenses by premiums earned.  The Company utilizes inter-affiliate reinsurance, although such reinsurance does not materially impact segment results, as business is generally reported within the segment in which the business was first produced.

The Company does not maintain separate balance sheet data for its operating segments.  Accordingly, the Company does not review and evaluate the financial results of its operating segments based upon balance sheet data.

The following tables present the underwriting results for the operating segments for the periods indicated:

U.S. Reinsurance	Years Ended December 31,
(Dollars in thousands)	2011			2010		2009
Gross written premiums	$	1,346,830		$	1,395,433	$	1,407,078
Net written premiums		1,344,273			1,392,637		1,397,182
Premiums earned	$	1,312,713		$	1,386,951	$	1,384,873
Incurred losses and LAE		1,034,111			900,938		738,134
Commission and brokerage		327,845			351,559		344,737
Other underwriting expenses		39,290			42,510		44,900
Underwriting gain (loss)	$	(88,533	)	$	91,944	$	257,102

Insurance	Years Ended December 31,
(Dollars in thousands)	2011			2010			2009
Gross written premiums	$	975,639		$	865,371		$	842,564
Net written premiums		820,519			620,301			656,178
Premiums earned	$	821,159		$	641,108		$	671,119
Incurred losses and LAE		705,914			536,753			538,626
Commission and brokerage		137,653			120,785			124,388
Other underwriting expenses		89,501			69,676			74,627
Underwriting gain (loss)	$	(111,909	)	$	(86,106	)	$	(66,522	)

International	Years Ended December 31,
(Dollars in thousands)	2011			2010			2009
Gross written premiums	$	1,238,444		$	1,206,953		$	1,084,476
Net written premiums		1,218,561			1,199,594			1,081,337
Premiums earned	$	1,244,492		$	1,168,130		$	1,053,538
Incurred losses and LAE		1,372,309			1,050,079			613,251
Commission and brokerage		310,992			288,423			267,121
Other underwriting expenses		27,307			27,646			23,083
Underwriting gain (loss)	$	(466,116	)	$	(198,018	)	$	150,083

Bermuda	Years Ended December 31,
(Dollars in thousands)	2011			2010		2009
Gross written premiums	$	725,261		$	732,962	$	794,837
Net written premiums		725,546			733,046		795,064
Premiums earned	$	722,983		$	738,436	$	784,568
Incurred losses and LAE		613,870			457,942		484,047
Commission and brokerage		174,031			171,088		192,087
Other underwriting expenses		26,305			26,426		24,568
Underwriting gain (loss)	$	(91,223	)	$	82,980	$	83,866

The following table reconciles the underwriting results for the operating segments to income before taxes as reported in the consolidated statements of operations and comprehensive income (loss) for the periods indicated:

	Years Ended December 31,
(Dollars in thousands)	2011			2010			2009
Underwriting gain (loss)	$	(757,781	)	$	(109,200	)	$	424,529
Net investment income		620,041			653,463			547,793
Net realized capital gains (losses)		6,923			101,911			(2,312	)
Realized gain on debt repurchase		-			-			78,271
Net derivative gain (loss)		(11,261	)		(1,119	)		3,204
Corporate expenses		(16,461	)		(14,914	)		(17,607	)
Interest, fee and bond issue cost amortization expense		(52,319	)		(55,830	)		(72,081	)
Other income (expense)		(23,089	)		16,927			(22,476	)
Income (loss) before taxes	$	(233,947	)	$	591,238		$	939,321

The Company produces business in the U.S., Bermuda and internationally.  The net income deriving from and assets residing in the individual foreign countries in which the Company writes business are not identifiable in the Company's financial records.  Based on gross written premium, the table below presents the largest country, other than the U.S., in which the Company writes business, for the period indicated:

	Years Ended December 31,
(Dollars in thousands)	2011		2010		2009
United Kingdom	$	453,169	$	498,437	$	497,595

Approximately 24.8%, 22.3% and 22.4% of the Company's gross written premiums in 2011, 2010 and 2009, respectively, were sourced through the Company's largest intermediary.