Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company has fourteen underwriting operating segments, including two that were exited in 2013, which are managed by the chief operating decision maker and are aggregated into two underwriting reportable segments. The two underwriting reportable segments were determined based on the nature of products or services, the production process, the method of distribution and the nature of the regulatory environment. The principal difference between the reportable segments is the type or class of customer.

The Specialty Products segment is comprised of eight operating segments, including a new Crop underwriting operating segment, as well as the Collector Cars and Boats underwriting operating segment that was exited in the first quarter of 2013 (see Note 2—"Acquisitions and Dispositions"), representing an aggregation based on those that offer distinct products and tailored coverages and services to a broad customer base across the United States. In addition to Crop and Collector Cars and Boats, the Specialty Products segment includes the Professional Insurance, Specialty Property, Environmental, Tuition Reimbursement, Programs, and Surety underwriting operating segments. During 2013, the Company received approval to provide multiple peril crop insurance through the federal crop insurance program administered by the U.S. Department of Agriculture's Risk Management Agency. The Company has entered into an exclusive agreement with a managing general agency, The Climate Corporation, to provide coverages through the federal program and other supplemental coverages, including crop-hail. The Company began writing crop business in the fourth quarter of 2013.

The Specialty Industries segment is comprised of six underwriting operating segments, including the Energy underwriting operating segment that was exited in the first quarter of 2013, representing an aggregation based on those that focus on solving the unique needs of a particular customer or industry group. The Specialty Industries segment includes the International Marine Underwriters, Technology, Accident, Government Risks, and Entertainment underwriting operating segments.

The Investing, Financing and Corporate segment includes the investing and financing activities for OneBeacon on a consolidated basis, and certain other activities conducted through the Company and its intermediate subsidiaries.

Invested assets are not allocated to the Specialty Products and Specialty Industries segments since OneBeacon does not manage them by segment. Invested assets, net investment income and net realized and change in unrealized investment gains related to OneBeacon's Specialty Products and Specialty Industries segments are included in the Investing, Financing and Corporate segment since these assets are available for payment of losses and expenses for all segments. Debt and the related interest expense on debt also are not allocated to or managed by segment and are also included in the Investing, Financing and Corporate segment.

Substantially all of the Company's revenue is generated from customers located in the United States.

Financial information for OneBeacon's reportable segments is as follows:

	Insurance Operations						Investing, Financing and Corporate
	Specialty Products			Specialty Industries						Consolidated
	($ in millions)
Three months ended March 31, 2014
Earned premiums	$	135.4		$	141.1		$	—		$	276.5
Loss and loss adjustment expense	(78.0		)	(71.4		)	—			(149.4		)
Policy acquisition expenses	(21.4		)	(25.3		)	—			(46.7		)
Other underwriting expenses	(22.2		)	(27.2		)	—			(49.4		)
Total underwriting income	13.8			17.2			—			31.0
Net investment income	—			—			10.0			10.0
Net realized and change in unrealized investment gains	—			—			18.9			18.9
Net other revenues	0.1			0.1			0.8			1.0
General and administrative expenses	0.1			(0.5		)	(2.9		)	(3.3		)
Interest expense	—			—			(3.2		)	(3.2		)
Pre-tax income from continuing operations	$	14.0		$	16.8		$	23.6		$	54.4
Three months ended March 31, 2013
Earned premiums	$	153.7		$	132.8		$	—		$	286.5
Loss and loss adjustment expense	(78.6		)	(70.3		)	—			(148.9		)
Policy acquisition expenses	(30.4		)	(24.4		)	—			(54.8		)
Other underwriting expenses	(24.3		)	(25.0		)	—			(49.3		)
Total underwriting income	20.4			13.1			—			33.5
Net investment income	—			—			9.4			9.4
Net realized and change in unrealized investment gains	—			—			28.4			28.4
Net other revenues	0.3			0.2			23.5			24.0
General and administrative expenses	—			(0.6		)	(3.4		)	(4.0		)
Interest expense	—			—			(3.2		)	(3.2		)
Pre-tax income from continuing operations	$	20.7		$	12.7		$	54.7		$	88.1

	Insurance Operations				Investing, Financing and Corporate(1)
	Specialty Products		Specialty Industries				Consolidated
	($ in millions)
March 31, 2014
Total investment securities	$	—	$	—	$	2,415.7	$	2,415.7
Reinsurance recoverables	56.2		26.9		—		83.1
Deferred acquisition costs	55.4		50.5		—		105.9
Unpaid loss and loss adjustment expense reserves	617.6		452.2		—		1,069.8
Unearned premiums	303.8		278.4		—		582.2
Debt	—		—		274.7		274.7
December 31, 2013
Total investment securities	$	—	$	—	$	2,364.9	$	2,364.9
Reinsurance recoverables	60.2		29.7		—		89.9
Deferred acquisition costs	53.6		50.1		—		103.7
Unpaid loss and loss adjustment expense reserves	607.8		446.5		—		1,054.3
Unearned premiums	275.4		269.5		—		544.9
Debt	—		—		274.7		274.7

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⁽¹⁾As described in Note 2, balances related to the the Runoff Business are presented as held for sale. Total investment securities excludes $222.2 million and $236.3 million of fixed maturity investments reclassified to assets held for sale as of March 31, 2014 and December 31, 2013, respectively.

The following tables provide net written premiums, earned premiums and underwriting ratios for OneBeacon's insurance operations by reportable segment and in total, for the three months ended March 31, 2014, and 2013:

	Insurance Operations
($ in millions)	Specialty Products			Specialty Industries			Consolidated
Three months ended March 31, 2014
Net written premiums	$	160.8		$	150.3		$	311.1
Earned premiums	135.4			141.1			276.5
Underwriting ratios:(1)
Loss and LAE	57.6		%	50.6		%	54.0		%
Expense	32.2			37.2			34.8
Total combined ratio	89.8		%	87.8		%	88.8		%
Three months ended March 31, 2013
Net written premiums	$	123.9		$	141.2		$	265.1
Earned premiums	153.7			132.8			286.5
Underwriting ratios:(1)
Loss and LAE	51.2		%	52.9		%	52.0		%
Expense	35.5			37.2			36.3
Total combined ratio	86.7		%	90.1		%	88.3		%

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⁽¹⁾ Underwriting ratios are used to measure the components of underwriting profitability and include: The loss and LAE ratio, calculated by dividing loss and LAE by earned premiums; the expense ratio, calculated by dividing policy acquisition and other underwriting expenses by earned premiums; and the combined ratio, the sum of the loss and LAE ratio and the expense ratio.