Segment Information

3 Months Ended

Mar. 31, 2020

The Company currently operates two business segments, “Property and Casualty” and “Accident and Health.” The “Corporate and Other” column represents the activities of the holding company, as well as income from the Company’s investment portfolio. The Company evaluates segment profits attributable to the performance of activities within the segment separately from the results of the Company’s investment portfolio. Other operating expenses allocated to the segments are called “General and administrative expenses” which are allocated on an actual basis except corporate salaries and benefits where management’s judgment is applied. In determining total assets by segment, the Company identifies those assets that are attributable to a particular segment such as premiums receivable, deferred acquisition costs, reinsurance recoverable, prepaid reinsurance premiums, intangible assets and goodwill, while the remaining assets are allocated to Corporate and Other.

The Property and Casualty segment, which includes the Reciprocal Exchanges and the management companies, reports the management fees earned by the Company from the Reciprocal Exchanges for underwriting, investment management and other services as service and fee income. The effects of these transactions between the Company and the Reciprocal Exchanges are eliminated in consolidation to derive consolidated net income. However, the management fee income is reported in net income attributable to NGHC and included in the basic and diluted earnings per share.

The following tables summarize the results of operations of the operating segments:


	Three Months Ended March 31, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	1,289,529	$	187,025	$	—	$	1,476,554
Ceded premiums	(248,142)		(18,809)		—		(266,951)
Net premium written	1,041,387		168,216		—		1,209,603
Change in unearned premium	(130,887)		(3,510)		—		(134,397)
Net earned premium	910,500		164,706		—		1,075,206
Ceding commission income	49,745		560		—		50,305
Service and fee income	98,917		80,524		—		179,441
Total underwriting revenues	1,059,162		245,790		—		1,304,952
Underwriting expenses:
Loss and loss adjustment expense	610,397		81,601		—		691,998
Acquisition costs and other underwriting expenses	159,771		68,471		—		228,242
General and administrative expenses	207,817		59,752		—		267,569
Total underwriting expenses	977,985		209,824		—		1,187,809
Underwriting income	81,177		35,966		—		117,143
Net investment income	—		—		30,243		30,243
Net loss on investments	—		—		(6,861)		(6,861)
Interest expense	—		—		(11,780)		(11,780)
Provision for income taxes	—		—		(28,172)		(28,172)
Net loss attributable to noncontrolling interest	—		—		186		186
Net income attributable to NGHC	$	81,177	$	35,966	$	(16,384)	$	100,759


	Three Months Ended March 31, 2019
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	1,251,234	$	258,544	$	—	$	1,509,778
Ceded premiums	(286,751)		(58,363)		—		(345,114)
Net premium written	964,483		200,181		—		1,164,664
Change in unearned premium	(161,906)		(38,601)		—		(200,507)
Net earned premium	802,577		161,580		—		964,157
Ceding commission income	66,943		2,591		—		69,534
Service and fee income	104,495		61,012		—		165,507
Total underwriting revenues	974,015		225,183		—		1,199,198
Underwriting expenses:
Loss and loss adjustment expense	567,060		84,749		—		651,809
Acquisition costs and other underwriting expenses	154,070		57,848		—		211,918
General and administrative expenses	189,456		58,638		—		248,094
Total underwriting expenses	910,586		201,235		—		1,111,821
Underwriting income	63,429		23,948		—		87,377
Net investment income	—		—		33,445		33,445
Net gain on investments	—		—		22		22
Interest expense	—		—		(12,999)		(12,999)
Provision for income taxes	—		—		(22,506)		(22,506)
Net loss attributable to noncontrolling interest	—		—		6,419		6,419
Net income attributable to NGHC	$	63,429	$	23,948	$	4,381	$	91,758

The following tables summarize the financial position of the operating segments:


	March 31, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Premiums and other receivables, net	$	1,373,437	$	167,928	$	395	$	1,541,760
Deferred acquisition costs	253,028		24,340		—		277,368
Reinsurance recoverable, net	1,380,374		21,307		—		1,401,681
Prepaid reinsurance premiums	511,613		35		—		511,648
Goodwill and Intangible assets, net	429,784		107,112		—		536,896
Prepaid and other assets	53,545		27,577		5,237		86,359
Corporate and other assets	—		—		5,504,862		5,504,862
Total assets	$	4,001,781	$	348,299	$	5,510,494	$	9,860,574


	December 31, 2019
	Property and Casualty		Accident and Health		Corporate and Other		Total
Premiums and other receivables, net	$	1,292,813	$	131,877	$	4,258	$	1,428,948
Deferred acquisition costs	239,293		24,230		—		263,523
Reinsurance recoverable, net	1,377,284		17,024		—		1,394,308
Prepaid reinsurance premiums	575,712		35		—		575,747
Goodwill and Intangible assets, net	436,724		108,427		—		545,151
Prepaid and other assets	56,960		32,852		4,830		94,642
Corporate and other assets	—		—		5,454,215		5,454,215
Total assets	$	3,978,786	$	314,445	$	5,463,303	$	9,756,534

The following tables summarize service and fee income by source within each operating segment:


	Three Months Ended March 31,
	2020										2019
	Property and Casualty		Accident and Health		Total		Property and Casualty		Accident and Health		Total
Commission revenue	$	18,751	$	29,632	$	48,383	$	27,210	$	24,771	$	51,981
Finance and processing fees	35,789		2,471		38,260		32,436		2,024		34,460
Group health administrative fees	—		29,975		29,975		—		23,505		23,505
Installment fees	25,088		—		25,088		24,170		—		24,170
Late payment fees	7,833		12		7,845		8,293		87		8,380
Other service and fee income	11,456		18,434		29,890		12,386		10,625		23,011
Total	$	98,917	$	80,524	$	179,441	$	104,495	$	61,012	$	165,507
NGHC	$	97,760	$	80,524	$	178,284	$	103,125	$	61,012	$	164,137
Reciprocal Exchanges	1,157		—		1,157		1,370		—		1,370
Total	$	98,917	$	80,524	$	179,441	$	104,495	$	61,012	$	165,507

The following tables show an analysis of premiums and fee income by product line:


	Three Months Ended March 31,
Gross Premium Written	2020		2019
Property and Casualty
Personal Auto	$	794,497	$	766,681
Homeowners	165,253		152,042
RV/Packaged	53,128		51,851
Small Business Auto	72,752		85,878
Lender-placed Insurance	95,444		75,938
Other	16,602		13,275
Total Property and Casualty	1,197,676		1,145,665
Accident and Health
Group	87,538		64,938
Individual	99,487		84,192
International	—		109,414
Total Accident and Health	187,025		258,544
Total NGHC	$	1,384,701	$	1,404,209
Reciprocal Exchanges
Personal Auto	$	31,809	$	36,862
Homeowners	59,236		67,800
Other	808		907
Total Reciprocal Exchanges	$	91,853	$	105,569
Total Gross Premium Written	$	1,476,554	$	1,509,778


	Three Months Ended March 31,
Net Premium Written	2020		2019
Property and Casualty
Personal Auto	$	702,307	$	658,920
Homeowners	88,543		85,245
RV/Packaged	51,978		51,597
Small Business Auto	58,599		74,186
Lender-placed Insurance	77,469		42,070
Other	7,196		3,510
Total Property and Casualty	986,092		915,528
Accident and Health
Group	69,471		53,950
Individual	98,745		84,123
International	—		62,108
Total Accident and Health	168,216		200,181
Total NGHC	$	1,154,308	$	1,115,709
Reciprocal Exchanges
Personal Auto	$	29,074	$	15,645
Homeowners	25,925		33,016
Other	296		294
Total Reciprocal Exchanges	$	55,295	$	48,955
Total Net Premium Written	$	1,209,603	$	1,164,664


	Three Months Ended March 31,
Net Earned Premium	2020		2019
Property and Casualty
Personal Auto	$	579,502	$	510,554
Homeowners	91,483		84,058
RV/Packaged	49,292		50,305
Small Business Auto	59,425		67,633
Lender-placed Insurance	69,667		41,718
Other	3,533		2,651
Total Property and Casualty	852,902		756,919
Accident and Health
Group	69,470		53,963
Individual	95,236		82,235
International	—		25,382
Total Accident and Health	164,706		161,580
NGHC Total	$	1,017,608	$	918,499
Reciprocal Exchanges
Personal Auto	$	32,923	$	15,861
Homeowners	24,333		29,491
Other	342		306
Total Reciprocal Exchanges	57,598		45,658
Total Net Earned Premium	$	1,075,206	$	964,157


	Three Months Ended March 31,
Fee Income	2020		2019
Property and Casualty
Service and Fee Income	$	97,760	$	103,125
Ceding Commission Income	36,031		48,409
Total Property and Casualty	133,791		151,534
Accident and Health
Service and Fee Income
Group	40,482		30,374
Individual	2,217		2,136
Third-Party Fee	37,825		28,502
Total Service and Fee Income	80,524		61,012
Ceding Commission Income	560		2,591
Total Accident and Health	81,084		63,603
NGHC Total	$	214,875	$	215,137
Reciprocal Exchanges
Service and Fee Income	$	1,157	$	1,370
Ceding Commission Income	13,714		18,534
Total Reciprocal Exchanges	$	14,871	$	19,904
Total Fee Income	$	229,746	$	235,041