Segment Information

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Information

Segment Information

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 June 30, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	1,151,944	$	189,657	$	—	$	1,341,601
Ceded premiums	(305,248)		(21,445)		—		(326,693)
Net premium written	846,696		168,212		—		1,014,908
Change in unearned premium	50,074		585		—		50,659
Net earned premium	896,770		168,797		—		1,065,567
Ceding commission income	46,169		471		—		46,640
Service and fee income	100,524		80,068		—		180,592
Total underwriting revenues	1,043,463		249,336		—		1,292,799
Underwriting expenses:
Loss and loss adjustment expense	533,791		66,655		—		600,446
Acquisition costs and other underwriting expenses	162,484		66,894		—		229,378
General and administrative expenses	204,418		57,991		—		262,409
Total underwriting expenses	900,693		191,540		—		1,092,233
Underwriting income	142,770		57,796		—		200,566
Net investment income	—		—		31,175		31,175
Net gain on investments	—		—		5,158		5,158
Interest expense	—		—		(11,779)		(11,779)
Provision for income taxes	—		—		(50,507)		(50,507)
Net (income) attributable to noncontrolling interest	—		—		(8,039)		(8,039)
Net income attributable to NGHC	$	142,770	$	57,796	$	(33,992)	$	166,574

	Three Months Ended June 30, 2019
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	1,142,236	$	171,672	$	—	$	1,313,908
Ceded premiums	(299,545)		(18,965)		—		(318,510)
Net premium written	842,691		152,707		—		995,398
Change in unearned premium	21,911		13,342		—		35,253
Net earned premium	864,602		166,049		—		1,030,651
Ceding commission income	56,264		3,928		—		60,192
Service and fee income	95,971		52,937		—		148,908
Total underwriting revenues	1,016,837		222,914		—		1,239,751
Underwriting expenses:
Loss and loss adjustment expense	629,211		86,324		—		715,535
Acquisition costs and other underwriting expenses	146,125		48,001		—		194,126
General and administrative expenses	186,475		61,292		—		247,767
Total underwriting expenses	961,811		195,617		—		1,157,428
Underwriting income	55,026		27,297		—		82,323
Net investment income	—		—		35,131		35,131
Net loss on investments	—		—		(5,230)		(5,230)
Interest expense	—		—		(12,925)		(12,925)
Provision for income taxes	—		—		(22,241)		(22,241)
Net loss attributable to noncontrolling interest	—		—		818		818
Net income attributable to NGHC	$	55,026	$	27,297	$	(4,447)	$	77,876

	Six Months Ended June 30, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	2,441,473	$	376,682	$	—	$	2,818,155
Ceded premiums	(553,390)		(40,254)		—		(593,644)
Net premium written	1,888,083		336,428		—		2,224,511
Change in unearned premium	(80,813)		(2,925)		—		(83,738)
Net earned premium	1,807,270		333,503		—		2,140,773
Ceding commission income	95,914		1,031		—		96,945
Service and fee income	199,441		160,592		—		360,033
Total underwriting revenues	2,102,625		495,126		—		2,597,751
Underwriting expenses:
Loss and loss adjustment expense	1,144,188		148,256		—		1,292,444
Acquisition costs and other underwriting expenses	322,255		135,365		—		457,620
General and administrative expenses	412,235		117,743		—		529,978
Total underwriting expenses	1,878,678		401,364		—		2,280,042
Underwriting income	223,947		93,762		—		317,709
Net investment income	—		—		61,418		61,418
Net loss on investments	—		—		(1,703)		(1,703)
Interest expense	—		—		(23,559)		(23,559)
Provision for income taxes	—		—		(78,679)		(78,679)
Net (income) attributable to noncontrolling interest	—		—		(7,853)		(7,853)
Net income attributable to NGHC	$	223,947	$	93,762	$	(50,376)	$	267,333

	Six Months Ended June 30, 2019
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	2,393,470	$	430,216	$	—	$	2,823,686
Ceded premiums	(586,296)		(77,328)		—		(663,624)
Net premium written	1,807,174		352,888		—		2,160,062
Change in unearned premium	(139,995)		(25,259)		—		(165,254)
Net earned premium	1,667,179		327,629		—		1,994,808
Ceding commission income	123,207		6,519		—		129,726
Service and fee income	200,466		113,949		—		314,415
Total underwriting revenues	1,990,852		448,097		—		2,438,949
Underwriting expenses:
Loss and loss adjustment expense	1,196,271		171,073		—		1,367,344
Acquisition costs and other underwriting expenses	300,195		105,849		—		406,044
General and administrative expenses	375,931		119,930		—		495,861
Total underwriting expenses	1,872,397		396,852		—		2,269,249
Underwriting income	118,455		51,245		—		169,700
Net investment income	—		—		68,576		68,576
Net loss on investments	—		—		(5,208)		(5,208)
Interest expense	—		—		(25,924)		(25,924)
Provision for income taxes	—		—		(44,747)		(44,747)
Net loss attributable to noncontrolling interest	—		—		7,237		7,237
Net income attributable to NGHC	$	118,455	$	51,245	$	(66)	$	169,634

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

	June 30, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Premiums and other receivables, net	$	1,312,117	$	173,084	$	2,533	$	1,487,734
Deferred acquisition costs	249,825		26,106		—		275,931
Reinsurance recoverable, net	1,270,703		21,933		—		1,292,636
Prepaid reinsurance premiums	517,918		164		—		518,082
Goodwill and Intangible assets, net	424,339		105,810		—		530,149
Prepaid and other assets	49,910		19,191		5,064		74,165
Corporate and other assets	—		—		5,839,146		5,839,146
Total assets	$	3,824,812	$	346,288	$	5,846,743	$	10,017,843

	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 June 30,
	2020						2019
	Property and Casualty		Accident and Health		Total		Property and Casualty		Accident and Health		Total
Commission revenue	$	17,916	$	24,354	$	42,270	$	19,650	$	15,973	$	35,623
Group health administrative fees	—		30,536		30,536		—		24,548		24,548
Finance and processing fees	28,186		2,205		30,391		32,145		886		33,031
Installment fees	26,405		—		26,405		25,148		—		25,148
Late payment fees	7,748		13		7,761		8,517		90		8,607
Other service and fee income	20,269		22,960		43,229		10,511		11,440		21,951
Total	$	100,524	$	80,068	$	180,592	$	95,971	$	52,937	$	148,908
NGHC	$	98,188	$	80,068	$	178,256	$	94,455	$	52,937	$	147,392
Reciprocal Exchanges	2,336		—		2,336		1,516		—		1,516
Total	$	100,524	$	80,068	$	180,592	$	95,971	$	52,937	$	148,908

	Six Months Ended June 30,
	2020						2019
	Property and Casualty		Accident and Health		Total		Property and Casualty		Accident and Health		Total
Commission revenue	$	36,667	$	53,986	$	90,653	$	46,860	$	40,744	$	87,604
Finance and processing fees	63,975		4,676		68,651		64,581		2,910		67,491
Group health administrative fees	—		60,511		60,511		—		48,053		48,053
Installment fees	51,493		—		51,493		49,318		—		49,318
Late payment fees	15,581		25		15,606		16,810		177		16,987
Other service and fee income	31,725		41,394		73,119		22,897		22,065		44,962
Total	$	199,441	$	160,592	$	360,033	$	200,466	$	113,949	$	314,415
NGHC	$	195,948	$	160,592	$	356,540	$	197,580	$	113,949	$	311,529
Reciprocal Exchanges	3,493		—		3,493		2,886		—		2,886
Total	$	199,441	$	160,592	$	360,033	$	200,466	$	113,949	$	314,415

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

	Three Months Ended June 30,				Six Months Ended June 30,
Gross Premium Written	2020		2019		2020		2019
Property and Casualty
Personal Auto	$	612,927	$	611,312	$	1,407,424	$	1,377,993
Homeowners	205,211		190,037		370,464		342,079
RV/Packaged	57,801		61,314		110,929		113,165
Small Business Auto	60,717		83,829		133,469		169,707
Lender-placed Insurance	103,922		58,859		199,366		134,797
Other	12,930		15,739		29,532		29,014
Total Property and Casualty	1,053,508		1,021,090		2,251,184		2,166,755
Accident and Health
Group	89,467		75,036		177,005		139,974
Individual	100,190		82,799		199,677		166,991
International	—		13,837		—		123,251
Total Accident and Health	189,657		171,672		376,682		430,216
Total NGHC	$	1,243,165	$	1,192,762	$	2,627,866	$	2,596,971
Reciprocal Exchanges
Personal Auto	$	37,382	$	43,984	$	69,191	$	80,846
Homeowners	60,160		76,140		119,396		143,940
Other	894		1,022		1,702		1,929
Total Reciprocal Exchanges	$	98,436	$	121,146	$	190,289	$	226,715
Total Gross Premium Written	$	1,341,601	$	1,313,908	$	2,818,155	$	2,823,686

	Three Months Ended June 30,				Six Months Ended June 30,
Net Premium Written	2020		2019		2020		2019
Property and Casualty
Personal Auto	$	533,242	$	511,952	$	1,235,549	$	1,170,872
Homeowners	84,257		108,404		172,800		193,649
RV/Packaged	55,882		58,167		107,860		109,764
Small Business Auto	46,429		65,420		105,028		139,606
Lender-placed Insurance	64,674		37,214		142,143		79,284
Other	4,944		5,314		12,140		8,824
Total Property and Casualty	789,428		786,471		1,775,520		1,701,999
Accident and Health
Group	69,217		57,960		138,688		111,910
Individual	98,995		82,652		197,740		166,775
International	—		12,095		—		74,203
Total Accident and Health	168,212		152,707		336,428		352,888
Total NGHC	$	957,640	$	939,178	$	2,111,948	$	2,054,887
Reciprocal Exchanges
Personal Auto	$	34,281	$	18,661	$	63,355	$	34,306
Homeowners	22,667		37,211		48,592		70,227
Other	320		348		616		642
Total Reciprocal Exchanges	$	57,268	$	56,220	$	112,563	$	105,175
Total Net Premium Written	$	1,014,908	$	995,398	$	2,224,511	$	2,160,062

	Three Months Ended June 30,				Six Months Ended June 30,
Net Earned Premium	2020		2019		2020		2019
Property and Casualty
Personal Auto	$	561,548	$	542,834	$	1,141,050	$	1,053,388
Homeowners	99,368		102,008		190,851		186,066
RV/Packaged	46,956		49,411		96,248		99,716
Small Business Auto	53,733		60,059		113,158		127,692
Lender-placed Insurance	71,102		60,278		140,769		101,996
Other	9,278		3,382		12,811		6,033
Total Property and Casualty	841,985		817,972		1,694,887		1,574,891
Accident and Health
Group	69,232		57,949		138,702		111,912
Individual	99,565		83,916		194,801		166,151
International	—		24,184		—		49,566
Total Accident and Health	168,797		166,049		333,503		327,629
NGHC Total	$	1,010,782	$	984,021	$	2,028,390	$	1,902,520
Reciprocal Exchanges
Personal Auto	$	31,714	$	16,093	$	64,637	$	31,954
Homeowners	22,741		30,225		47,074		59,716
Other	330		312		672		618
Total Reciprocal Exchanges	$	54,785	$	46,630	$	112,383	$	92,288
Total Net Earned Premium	$	1,065,567	$	1,030,651	$	2,140,773	$	1,994,808

	Three Months Ended June 30,				Six Months Ended June 30,
Fee Income	2020		2019		2020		2019
Property and Casualty
Service and Fee Income	$	98,188	$	94,455	$	195,948	$	197,580
Ceding Commission Income	35,059		39,418		71,090		87,827
Total Property and Casualty	133,247		133,873		267,038		285,407
Accident and Health
Service and Fee Income
Group	43,241		32,862		83,723		63,236
Individual	2,265		1,242		4,482		3,378
Third-Party Fee	34,562		18,833		72,387		47,335
Total Service and Fee Income	80,068		52,937		160,592		113,949
Ceding Commission Income	471		3,928		1,031		6,519
Total Accident and Health	80,539		56,865		161,623		120,468
NGHC Total	$	213,786	$	190,738	$	428,661	$	405,875
Reciprocal Exchanges
Service and Fee Income	$	2,336	$	1,516	$	3,493	$	2,886
Ceding Commission Income	11,110		16,846		24,824		35,380
Total Reciprocal Exchanges	$	13,446	$	18,362	$	28,317	$	38,266
Total Fee Income	$	227,232	$	209,100	$	456,978	$	444,141