Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

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 type of accounts 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, London, Miami, 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 expenses directly attributable to individual segments, staff count and each segment’s proportional share of gross premiums written.

The Company measures its segment profit or loss as underwriting income or loss plus other insurance-related income and expenses, which may include the net earnings from our claims administration services operations and other income or expense that is not directly related to our underwriting operations. Management measures results for each segment's underwriting income or loss on the basis of the “loss and loss expense ratio,” “acquisition cost ratio,” “general and administrative expense ratio,” “expense ratio” and “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 March 31, 2017	North American Insurance			Global Markets Insurance			Reinsurance			Total
Gross premiums written	$	396.8		$	115.8		$	348.3		$	860.9
Net premiums written	253.9			89.6			332.6			676.1
Net premiums earned	295.0			92.7			157.2			544.9
Net losses and loss expenses	(218.2		)	(55.2		)	(85.6		)	(359.0		)
Acquisition costs	(25.4		)	(16.2		)	(35.5		)	(77.1		)
General and administrative expenses	(59.0		)	(28.2		)	(16.9		)	(104.1		)
Underwriting (loss) income	(7.6		)	(6.9		)	19.2			4.7
Other insurance-related income	0.5			0.8			—			1.3
Other insurance-related expenses	(1.4		)	(0.4		)	(0.5		)	(2.3		)
Segment (loss) income	(8.5		)	(6.5		)	18.7			3.7
Net investment income										52.3
Net realized investment gains										40.7
Amortization of intangible assets										(2.3		)
Other expenses										(4.8		)
Interest expense										(10.4		)
Foreign exchange loss										(1.4		)
Income before income taxes										$	77.8
Loss and loss expense ratio	74.0		%	59.5		%	54.5		%	65.9		%
Acquisition cost ratio	8.6		%	17.5		%	22.6		%	14.1		%
General and administrative expense ratio	20.0		%	30.4		%	10.7		%	19.1		%
Expense ratio	28.6		%	47.9		%	33.3		%	33.2		%
Combined ratio	102.6		%	107.4		%	87.8		%	99.1		%

Three Months Ended March 31, 2016	North American Insurance			Global Markets Insurance			Reinsurance			Total
Gross premiums written	$	379.2		$	115.5		$	368.8		$	863.5
Net premiums written	266.2			87.6			350.2			704.0
Net premiums earned	316.3			94.2			169.6			580.1
Net losses and loss expenses	(216.3		)	(67.8		)	(88.3		)	(372.4		)
Acquisition costs	(33.9		)	(17.9		)	(36.5		)	(88.3		)
General and administrative expenses	(52.2		)	(29.0		)	(15.2		)	(96.4		)
Underwriting income (loss)	13.9			(20.5		)	29.6			23.0
Other insurance-related income	0.6			—			—			0.6
Other insurance-related expenses	(0.7		)	—			(0.4		)	(1.1		)
Segment income (loss)	13.8			(20.5		)	29.2			22.5
Net investment income										53.3
Net realized investment gains										18.9
Amortization of intangible assets										(2.5		)
Interest expense										(20.0		)
Foreign exchange gain										3.0
Income before income taxes										$	75.2
Loss and loss expense ratio	68.4		%	72.0		%	52.1		%	64.2		%
Acquisition cost ratio	10.7		%	19.0		%	21.5		%	15.2		%
General and administrative expense ratio	16.5		%	30.8		%	8.9		%	16.6		%
Expense ratio	27.2		%	49.8		%	30.4		%	31.8		%
Combined ratio	95.6		%	121.8		%	82.5		%	96.0		%

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   March 31,
	2017		2016
United States	$	537.2	$	524.0
Bermuda	142.6		144.2
Europe	94.0		88.9
Asia Pacific	82.5		102.2
Canada	4.6		4.2
Total gross premiums written	$	860.9	$	863.5

Europe includes gross premiums written attributable to Switzerland of $35.1 million and $35.6 million for the three months ended March 31, 2017 and 2016, respectively.

The following table shows the Company’s net premiums earned by line of business for each segment for the three months ended March 31, 2017 and 2016, respectively.

	Three Months Ended   March 31,
	2017		2016
North American Insurance:
Casualty	$	92.1	$	96.7
Professional liability	81.6		101.5
Programs	47.6		39.6
Other specialty	32.6		25.2
Property	27.3		33.8
Healthcare	13.8		19.5
Total	295.0		316.3
Global Markets Insurance:
Other specialty	30.9		30.8
Professional liability	23.0		23.5
Casualty	21.3		23.6
Property	17.5		16.3
Total	92.7		94.2
Reinsurance:
Property	76.6		84.4
Casualty	44.2		46.2
Specialty	36.4		39.0
Total	157.2		169.6
Total net premiums earned	$	544.9	$	580.1