SEGMENT INFORMATION

The determination of reportable segments is based on how senior management monitors the Company’s underwriting operations. Management monitors the performance of its direct underwriting operations based on the geographic location of the Company’s offices, the markets and customers served and the types of account written. The Company is currently organized into three operating segments: North American Insurance, Global Markets Insurance and Reinsurance. All lines of business fall within these classifications.

The North American Insurance segment includes the Company’s specialty insurance operations in the United States, Bermuda and Canada, as well as the Company's claims administration services operation. This segment provides both property and specialty casualty insurance primarily to North American domiciled accounts. The Global Markets Insurance segment includes the Company’s specialty insurance operations in Europe and Asia Pacific, which includes offices in Dublin, Hong Kong, Labuan, London, Singapore, Sydney, and Zug, as well as the Company's insurance agency operation. This segment provides both property and casualty insurance primarily to non-North American domiciled accounts. The Reinsurance segment includes the Company’s reinsurance operations in Bermuda, Labuan, London, New York, Singapore, and Zug. This segment provides reinsurance of property, general casualty, professional liability, specialty lines and property catastrophe coverages written by insurance companies. The Company presently writes reinsurance on both a treaty and a facultative basis, targeting several niche reinsurance markets.

Responsibility and accountability for the results of underwriting operations are assigned by major line of business within each segment. Because the Company does not manage its assets by segment, investment income, interest expense and total assets are not allocated to individual reportable segments. General and administrative expenses are allocated to segments based on various factors, including staff count and each segment’s proportional share of gross premiums written.

The Company measures its segment income or loss as underwriting income or loss plus other insurance-related income and expenses, which may include the net earnings from the claims administration services operation, insurance agency operation and other income or expense that is not directly related to our underwriting operations. Management measures results for each segment's underwriting income on the basis of the “loss and loss expense ratio,” “acquisition cost ratio,” “general and administrative expense ratio,” “expense ratio” and the “combined ratio.” The “loss and loss expense ratio” is derived by dividing net losses and loss expenses by net premiums earned. The “acquisition cost ratio” is derived by dividing acquisition costs by net premiums earned. The “general and administrative expense ratio” is derived by dividing general and administrative expenses by net premiums earned. The expense ratio is the sum of the acquisition cost ratio and the general and administrative expense ratio. The “combined ratio” is the sum of the “loss and loss expense ratio,” the “acquisition cost ratio” and the “general and administrative expense ratio.”

The following tables provide a summary of the segment results:



Three Months Ended September 30, 2016	North American Insurance			Global Markets Insurance			Reinsurance			Total
Gross premiums written	$	466.5		$	126.7		$	137.0		$	730.2
Net premiums written	307.9			91.3			129.1			528.3
Net premiums earned	312.8			96.8			174.4			584.0
Net losses and loss expenses	(215.9		)	(74.5		)	(85.9		)	(376.3		)
Acquisition costs	(31.5		)	(16.4		)	(34.1		)	(82.0		)
General and administrative expenses	(55.1		)	(32.6		)	(16.5		)	(104.2		)
Underwriting income (loss)	10.3			(26.7		)	37.9			21.5
Other insurance-related income	1.1			0.7			—			1.8
Other insurance-related expenses	(0.6		)	(0.3		)	(1.3		)	(2.2		)
Segment income (loss)	$	10.8		$	(26.3	)	$	36.6		$	21.1
Net investment income										50.6
Net realized investment gains										10.7
Amortization of intangible assets										(2.5		)
Interest expense										(13.5		)
Foreign exchange loss										(1.0		)
Income before income taxes										$	65.4

Loss and loss expense ratio	69.0		%	77.0		%	49.3		%	64.4		%
Acquisition cost ratio	10.1		%	17.0		%	19.5		%	14.0		%
General and administrative expense ratio	17.6		%	33.7		%	9.5		%	17.8		%
Expense ratio	27.7		%	50.7		%	29.0		%	31.8		%
Combined ratio	96.7		%	127.7		%	78.3		%	96.2		%



Three Months Ended September 30, 2015	North American Insurance			Global Markets Insurance			Reinsurance			Total
Gross premiums written	$	460.4		$	132.7		$	161.0		$	754.1
Net premiums written	350.8			104.1			152.1			607.0
Net premiums earned	332.8			110.3			207.6			650.7
Net losses and loss expenses	(222.3		)	(70.9		)	(123.7		)	(416.9		)
Acquisition costs	(35.6		)	(22.7		)	(41.8		)	(100.1		)
General and administrative expenses	(58.3		)	(29.3		)	(18.2		)	(105.8		)
Underwriting income (loss)	16.6			(12.6		)	23.9			27.9
Other insurance-related income	0.7			—			—			0.7
Other insurance-related expenses	(0.7		)	(0.6		)	—			(1.3		)
Segment income (loss)	$	16.6		$	(13.2	)	$	23.9		$	27.3
Net investment income										45.7
Net realized investment losses										(113.6		)
Amortization of intangible assets										(2.6		)
Interest expense										(14.5		)
Foreign exchange gain										0.8
Loss before income taxes										$	(56.9	)

Loss and loss expense ratio	66.8		%	64.3		%	59.6		%	64.1		%
Acquisition cost ratio	10.7		%	20.6		%	20.1		%	15.4		%
General and administrative expense ratio	17.5		%	26.6		%	8.7		%	16.3		%
Expense ratio	28.2		%	47.2		%	28.8		%	31.7		%
Combined ratio	95.0		%	111.5		%	88.4		%	95.8		%



Nine Months Ended September 30, 2016	North American Insurance			Global Markets Insurance			Reinsurance			Total
Gross premiums written	$	1,354.1		$	367.6		$	672.4		$	2,394.1
Net premiums written	904.9			267.1			638.5			1,810.5
Net premiums earned	958.8			285.1			523.2			1,767.1
Net losses and loss expenses	(642.1		)	(203.4		)	(268.6		)	(1,114.1		)
Acquisition costs	(102.8		)	(50.6		)	(104.3		)	(257.7		)
General and administrative expenses	(164.1		)	(93.2		)	(48.0		)	(305.3		)
Underwriting income (loss)	49.8			(62.1		)	102.3			90.0
Other insurance-related income	2.6			0.7			4.3			7.6
Other insurance-related expenses	(1.9		)	(0.3		)	(2.8		)	(5.0		)
Segment income (loss)	$	50.5		$	(61.7	)	$	103.8		$	92.6
Net investment income										159.7
Net realized investment gains										104.0
Amortization of intangible assets										(7.5		)
Interest expense										(53.3		)
Foreign exchange gain										4.9
Income before income taxes										$	300.4

Loss and loss expense ratio	67.0		%	71.3		%	51.3		%	63.0		%
Acquisition cost ratio	10.7		%	17.7		%	19.9		%	14.6		%
General and administrative expense ratio	17.1		%	32.7		%	9.2		%	17.3		%
Expense ratio	27.8		%	50.4		%	29.1		%	31.9		%
Combined ratio	94.8		%	121.7		%	80.4		%	94.9		%



Nine Months Ended September 30, 2015	North American Insurance			Global Markets Insurance			Reinsurance			Total
Gross premiums written	$	1,358.6		$	328.2		$	773.8		$	2,460.6
Net premiums written	1,019.9			216.2			747.1			1,983.2
Net premiums earned	974.2			263.0			628.4			1,865.6
Net losses and loss expenses	(655.5		)	(157.2		)	(360.9		)	(1,173.6		)
Acquisition costs	(100.8		)	(54.1		)	(124.5		)	(279.4		)
General and administrative expenses	(175.7		)	(78.1		)	(57.5		)	(311.3		)
Underwriting income (loss)	42.2			(26.4		)	85.5			101.3
Other insurance-related income	2.5			—			—			2.5
Other insurance-related expenses	(2.1		)	(2.2		)	—			(4.3		)
Segment income (loss)	$	42.6		$	(28.6	)	$	85.5		$	99.5
Net investment income										133.0
Net realized investment gains										(88.8		)
Amortization of intangible assets										(6.1		)
Interest expense										(43.2		)
Foreign exchange loss										(10.4		)
Income before income taxes										$	84.0

Loss and loss expense ratio	67.3		%	59.8		%	57.4		%	62.9		%
Acquisition cost ratio	10.3		%	20.6		%	19.8		%	15.0		%
General and administrative expense ratio	18.0		%	29.7		%	9.1		%	16.7		%
Expense ratio	28.3		%	50.3		%	28.9		%	31.7		%
Combined ratio	95.6		%	110.1		%	86.3		%	94.6		%

The following table shows an analysis of the Company’s gross premiums written by geographic location of the Company’s subsidiaries and branches. All intercompany premiums have been eliminated.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
United States	$	497.5	$	489.6	$	1,517.5	$	1,509.3
Asia Pacific	87.4		106.0		281.1		239.3
Bermuda	75.1		84.5		360.1		449.0
Europe	67.2		70.8		220.8		251.0
Canada	3.0		3.2		14.6		12.0
Total gross premiums written	$	730.2	$	754.1	$	2,394.1	$	2,460.6

Europe includes gross premiums written attributable to Switzerland of $8.3 million and $12.2 million for the three months ended September 30, 2016 and 2015, respectively, and $46.3 million and $56.9 million for the nine months ended September 30, 2016 and 2015, respectively.

The following table shows the Company's net premiums earned by line of business for each segment for each of the periods indicated.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
North American Insurance:
Casualty	$	100.7	$	112.2	$	301.8	$	326.2
Professional liability	93.9		98.4		298.5		281.9
Programs	42.4		38.3		125.3		109.2
Other specialty	30.9		20.0		84.2		52.9
Property	29.1		39.3		97.5		123.2
Healthcare	15.8		24.6		51.5		80.8
Total	312.8		332.8		958.8		974.2

Global Markets Insurance:
Other specialty	33.5		30.0		94.6		69.9
Professional liability	24.2		27.7		73.2		77.0
Casualty	22.3		32.0		68.0		68.9
Property	16.8		20.6		49.3		47.2
Total	96.8		110.3		285.1		263.0

Reinsurance:
Property	82.9		102.3		250.6		311.5
Casualty	48.1		58.2		141.0		174.0
Specialty	43.4		47.1		131.6		142.9
Total	174.4		207.6		523.2		628.4
Total net premiums earned	$	584.0	$	650.7	$	1,767.1	$	1,865.6