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Segment Information
 6 Months Ended
Jun. 30, 2013
Segment Information [Abstract]  
Segment Information

11. 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: U.S. insurance, international insurance and reinsurance. All product lines fall within these classifications.

 

The U.S. insurance segment includes the Company's direct specialty insurance operations in the United States. This segment provides both direct property and specialty casualty insurance primarily to non-Fortune 1000 North American domiciled accounts. The international insurance segment includes the Company's direct insurance operations in Bermuda, Europe, Singapore and Hong Kong. This segment provides both direct property and casualty insurance primarily to Fortune 1000 North American domiciled accounts from the Bermuda office and direct property and specialty casualty insurance to our non-North American domiciled accounts from the European, Singapore and Hong Kong offices. The reinsurance segment includes the Company's reinsurance operations in the United States, Bermuda, Europe, Singapore and Hong Kong. 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.

 

Management measures results for each segment on the basis of the “loss and loss expense ratio,” “acquisition cost ratio,” “general and administrative 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 “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:

     International      
Three Months Ended June 30, 2013 U.S. Insurance Insurance Reinsurance Total
Gross premiums written $307,297 $192,593 $265,310 $765,200
Net premiums written  221,419  106,394  253,409  581,222
Net premiums earned  197,436  87,041  222,794  507,271
Net losses and loss expenses  (124,364)  (30,968)  (119,796)  (275,128)
Acquisition costs  (27,270)  358  (37,705)  (64,617)
General and administrative expenses  (38,302)  (24,135)  (18,148)  (80,585)
Underwriting income  7,500  32,296  47,145  86,941
Net investment income           37,635
Net realized investment losses           (115,198)
Amortization of intangible assets           (634)
Interest expense           (14,188)
Foreign exchange loss           (490)
Loss before income taxes          $(5,934)
             
Loss and loss expense ratio  63.0%  35.6%  53.8%  54.2%
Acquisition cost ratio  13.8%  (0.4%)  16.9%  12.7%
General and administrative expense ratio  19.4%  27.7%  8.1%  15.9%
Combined ratio  96.2%  62.9%  78.8%  82.8%

     International      
Three Months Ended June 30, 2012 U.S. Insurance Insurance Reinsurance Total
Gross premiums written $265,974 $183,593 $197,303 $646,870
Net premiums written  196,661  111,342  186,707  494,710
Net premiums earned  162,785  82,605  184,357  429,747
Net losses and loss expenses  (103,074)  (22,233)  (115,073)  (240,380)
Acquisition costs  (21,250)  582  (30,920)  (51,588)
General and administrative expenses  (34,730)  (21,648)  (17,601)  (73,979)
Underwriting income  3,731  39,306  20,763  63,800
Net investment income           42,451
Net realized investment gains           8,663
Amortization of intangible assets           (634)
Interest expense           (14,001)
Foreign exchange gain           1,019
Income before income taxes          $101,298
             
Loss and loss expense ratio  63.3%  26.9%  62.4%  55.9%
Acquisition cost ratio  13.1%  (0.7%)  16.8%  12.0%
General and administrative expense ratio  21.3%  26.2%  9.5%  17.2%
Combined ratio  97.7%  52.4%  88.7%  85.1%

     International      
Six Months Ended June 30, 2013 U.S. Insurance Insurance Reinsurance Total
Gross premiums written $563,315 $321,109 $717,857 $1,602,281
Net premiums written  413,672  184,139  678,463  1,276,274
Net premiums earned  385,875  171,255  413,369  970,499
Net losses and loss expenses  (257,688)  (59,903)  (212,715)  (530,306)
Acquisition costs  (50,398)  1,207  (72,111)  (121,302)
General and administrative expenses  (77,898)  (48,924)  (36,443)  (163,265)
Underwriting (loss) income  (109)  63,635  92,100  155,626
Net investment income           71,023
Net realized investment losses           (35,561)
Amortization of intangible assets           (1,267)
Interest expense           (28,322)
Foreign exchange loss           (3,008)
Income before income taxes          $158,491
             
Loss and loss expense ratio  66.8%  35.0%  51.5%  54.6%
Acquisition cost ratio  13.1%  (0.7%)  17.4%  12.5%
General and administrative expense ratio  20.2%  28.6%  8.8%  16.8%
Combined ratio  100.1%  62.9%  77.7%  83.9%

     International      
Six Months Ended June 30, 2012 U.S. Insurance Insurance Reinsurance Total
Gross premiums written $470,185 $297,183 $560,431 $1,327,799
Net premiums written  350,507  183,951  549,205  1,083,663
Net premiums earned  316,143  162,476  353,018  831,637
Net losses and loss expenses  (200,778)  (60,333)  (204,471)  (465,582)
Acquisition costs  (41,222)  1,110  (58,614)  (98,726)
General and administrative expenses  (65,774)  (44,049)  (34,522)  (144,345)
Underwriting income  8,369  59,204  55,411  122,984
Net investment income           89,660
Net realized investment gains           142,244
Amortization of intangible assets           (1,267)
Interest expense           (27,757)
Foreign exchange gain           1,100
Income before income taxes          $326,964
             
Loss and loss expense ratio  63.5%  37.1%  57.9%  56.0%
Acquisition cost ratio  13.0%  (0.7%)  16.6%  11.9%
General and administrative expense ratio  20.8%  27.1%  9.8%  17.3%
Combined ratio  97.3%  63.5%  84.3%  85.2%

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

 

 Three Months Ended Six Months Ended
 June 30, June 30,
 2013 2012 2013 2012
United States$440,151 $349,577 $918,594 $738,548
Bermuda 211,040  193,195  439,712  375,358
Europe 60,234  60,008  146,743  135,384
Singapore 48,918  40,128  87,031  69,311
Hong Kong 4,857  3,962  10,201  9,198
Total gross premiums written$765,200 $646,870 $1,602,281 $1,327,799

Europe includes gross premiums written attributable to Switzerland of $5,868 and $4,071 for the three months ended June 30, 2013 and 2012, respectively, and $46,674 and $33,435 for the six months ended June 30, 2013 and 2012, respectively.