Segment Information

The Company is engaged in the sale of property and casualty insurance products and has organized its business model around two classes of insurance businesses: commercial and personal lines. Within these two insurance businesses, the Company offers various insurance products. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies.

The Company defines its operating segments as components of the business where separate financial information is available and used by the chief operating decision-making group in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s chief operating decisionmaking group, comprised of key senior executives, reviews a number of financial measures including gross written premiums, net earned premiums and losses and LAE, net of reinsurance recoveries. The primary measure used for making decisions about resources to be allocated to an operating segment and assessing its performance is segment underwriting gain or loss which is defined as segment revenues, consisting of net earned premiums and other income, less segment expenses, consisting of losses and LAE, policy acquisition costs and operating expenses of the operating segments. Operating expenses primarily include compensation and related benefits for underwriting personnel, policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products through its own insurance agencies and a network of independent agents. All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Florida, Michigan, Texas and Pennsylvania. For the three months ended March 31, 2018 and 2017, gross written premiums attributable to these four states were 60% and 58% of the Company’s total gross written premiums.

In addition to the reportable operating segments, the Company maintains a Corporate and Other category to reconcile segment results to the consolidated totals. The Corporate and Other category includes: (i) corporate operating expenses such as salaries and related benefits of the Company’s executive management team, and other corporate headquarters expenses, (ii) interest expense on the Company’s debt obligations; and (iii) all investment income activity. All investment income activity is reported within net investment income and net realized investment gains on the consolidated statements of operations. The Company’s assets on the consolidated balance sheet are not allocated to the reportable segments.



Three Months Ended March 31, 2018	Commercial Lines		Personal Lines			Corporate & Other			Total
Gross written premiums	$	21,788	$	1,949		$	—		$	23,737
Net written premiums	$	19,422	$	423		$	—		$	19,845

Net earned premiums	$	20,127	$	3,673		$	—		$	23,800
Other income	143		180			34			357
Segment revenue	20,270		3,853			34			24,157
Losses and loss adjustment expenses, net	10,200		3,128			—			13,328
Policy acquisition costs	5,442		1,071			—			6,513
Operating expenses	3,498		370			319			4,187
Segment expenses	19,140		4,569			319			24,028
Segment underwriting gain (loss)	$	1,130	$	(716	)	(285		)	129

Net investment income						802			802
Net realized investment gains						161			161
Change in fair value of equity securities						(297		)	(297		)
Interest expense						(619		)	(619		)
Income (loss) before equity earnings of affiliates and income taxes						$	(238	)	$	176



Three Months Ended March 31, 2017	Commercial Lines			Personal Lines			Corporate & Other			Total
Gross written premiums	$	21,644		$	4,830		$	—		$	26,474
Net written premiums	$	19,479		$	2,845		$	—		$	22,324

Net earned premiums	$	19,689		$	4,451		$	—		$	24,140
Other income	164			151			39			354
Segment revenue	19,853			4,602			39			24,494
Losses and loss adjustment expenses, net	12,468			3,265			—			15,733
Policy acquisition costs	5,022			1,450			—			6,472
Operating expenses	2,472			569			1,489			4,530
Segment expenses	19,962			5,284			1,489			26,735
Segment underwriting gain (loss)	$	(109	)	$	(682	)	(1,450		)	(2,241		)

Net investment income							577			577
Net realized investment losses							(8		)	(8		)
Interest expense							(224		)	(224		)
Income (loss) before equity earnings of affiliates and income taxes							$	(1,105	)	$	(1,896	)