Segment Information

9 Months Ended

Sep. 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 September 30, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	1,277,190	$	195,937	$	—	$	1,473,127
Ceded premiums	(186,264)		(21,607)		—		(207,871)
Net premium written	1,090,926		174,330		—		1,265,256
Change in unearned premium	(87,757)		1,074		—		(86,683)
Net earned premium	1,003,169		175,404		—		1,178,573
Ceding commission income	30,519		205		—		30,724
Service and fee income	96,372		88,597		—		184,969
Total underwriting revenues	1,130,060		264,206		—		1,394,266
Underwriting expenses:
Loss and loss adjustment expense	696,216		77,948		—		774,164
Acquisition costs and other underwriting expenses	189,367		79,278		—		268,645
General and administrative expenses	182,146		58,892		3,573		244,611
Total underwriting expenses	1,067,729		216,118		3,573		1,287,420
Underwriting income	62,331		48,088		(3,573)		106,846
Net investment income	—		—		28,904		28,904
Net gain on investments	—		—		19,839		19,839
Interest expense	—		—		(11,292)		(11,292)
Provision for income taxes	—		—		(27,428)		(27,428)
Net (income) attributable to noncontrolling interest	—		—		(6,900)		(6,900)
Net income attributable to NGHC	$	62,331	$	48,088	$	(450)	$	109,969

	Three Months Ended September 30, 2019
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	1,272,602	$	162,555	$	—	$	1,435,157
Ceded premiums	(385,347)		(15,206)		—		(400,553)
Net premium written	887,255		147,349		—		1,034,604
Change in unearned premium	(2,520)		21,554		—		19,034
Net earned premium	884,735		168,903		—		1,053,638
Ceding commission income	55,326		2,261		—		57,587
Service and fee income	97,890		63,736		—		161,626
Total underwriting revenues	1,037,951		234,900		—		1,272,851
Underwriting expenses:
Loss and loss adjustment expense	674,722		70,612		—		745,334
Acquisition costs and other underwriting expenses	161,876		47,214		—		209,090
General and administrative expenses	195,567		68,297		—		263,864
Total underwriting expenses	1,032,165		186,123		—		1,218,288
Underwriting income	5,786		48,777		—		54,563
Net investment income	—		—		33,740		33,740
Net gain on investments	—		—		1,581		1,581
Interest expense	—		—		(12,898)		(12,898)
Provision for income taxes	—		—		(16,747)		(16,747)
Net loss attributable to noncontrolling interest	—		—		10,915		10,915
Net income attributable to NGHC	$	5,786	$	48,777	$	16,591	$	71,154

	Nine Months Ended September 30, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	3,718,663	$	572,619	$	—	$	4,291,282
Ceded premiums	(739,654)		(61,861)		—		(801,515)
Net premium written	2,979,009		510,758		—		3,489,767
Change in unearned premium	(168,570)		(1,851)		—		(170,421)
Net earned premium	2,810,439		508,907		—		3,319,346
Ceding commission income	126,433		1,236		—		127,669
Service and fee income	295,813		249,189		—		545,002
Total underwriting revenues	3,232,685		759,332		—		3,992,017
Underwriting expenses:
Loss and loss adjustment expense	1,840,404		226,204		—		2,066,608
Acquisition costs and other underwriting expenses	511,622		214,643		—		726,265
General and administrative expenses	594,381		176,635		3,573		774,589
Total underwriting expenses	2,946,407		617,482		3,573		3,567,462
Underwriting income	286,278		141,850		(3,573)		424,555
Net investment income	—		—		90,322		90,322
Net gain on investments	—		—		18,136		18,136
Interest expense	—		—		(34,851)		(34,851)
Provision for income taxes	—		—		(106,107)		(106,107)
Net (income) attributable to noncontrolling interest	—		—		(14,753)		(14,753)
Net income attributable to NGHC	$	286,278	$	141,850	$	(50,826)	$	377,302

	Nine Months Ended September 30, 2019
	Property and Casualty		Accident and Health		Corporate and Other		Total
Underwriting revenues:
Gross premium written	$	3,666,072	$	592,771	$	—	$	4,258,843
Ceded premiums	(971,643)		(92,534)		—		(1,064,177)
Net premium written	2,694,429		500,237		—		3,194,666
Change in unearned premium	(142,515)		(3,705)		—		(146,220)
Net earned premium	2,551,914		496,532		—		3,048,446
Ceding commission income	178,533		8,780		—		187,313
Service and fee income	298,356		177,685		—		476,041
Total underwriting revenues	3,028,803		682,997		—		3,711,800
Underwriting expenses:
Loss and loss adjustment expense	1,870,993		241,685		—		2,112,678
Acquisition costs and other underwriting expenses	462,071		153,063		—		615,134
General and administrative expenses	571,498		188,227		—		759,725
Total underwriting expenses	2,904,562		582,975		—		3,487,537
Underwriting income	124,241		100,022		—		224,263
Net investment income	—		—		102,316		102,316
Net loss on investments	—		—		(3,627)		(3,627)
Interest expense	—		—		(38,822)		(38,822)
Provision for income taxes	—		—		(61,494)		(61,494)
Net loss attributable to noncontrolling interest	—		—		18,152		18,152
Net income attributable to NGHC	$	124,241	$	100,022	$	16,525	$	240,788

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

	September 30, 2020
	Property and Casualty		Accident and Health		Corporate and Other		Total
Premiums and other receivables, net	$	1,379,512	$	197,487	$	21,317	$	1,598,316
Deferred acquisition costs	257,294		27,669		—		284,963
Reinsurance recoverable, net	1,260,791		26,061		—		1,286,852
Prepaid reinsurance premiums	458,578		382		—		458,960
Goodwill and Intangible assets, net	420,779		104,523		—		525,302
Prepaid and other assets	49,533		12,257		5,100		66,890
Corporate and other assets	—		—		6,002,973		6,002,973
Total assets	$	3,826,487	$	368,379	$	6,029,390	$	10,224,256

	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 September 30,
	2020						2019
	Property and Casualty		Accident and Health		Total		Property and Casualty		Accident and Health		Total
Finance and processing fees	$	32,237	$	2,546	$	34,783	$	33,637	$	800	$	34,437
Commission revenue	11,799		21,836		33,635		21,333		16,353		37,686
Group health administrative fees	—		31,147		31,147		—		25,808		25,808
Installment fees	26,789		—		26,789		23,464		—		23,464
Late payment fees	8,324		16		8,340		9,251		72		9,323
Other service and fee income	17,223		33,052		50,275		10,205		20,703		30,908
Total	$	96,372	$	88,597	$	184,969	$	97,890	$	63,736	$	161,626
NGHC	$	94,744	$	88,597	$	183,341	$	96,305	$	63,736	$	160,041
Reciprocal Exchanges	1,628		—		1,628		1,585		—		1,585
Total	$	96,372	$	88,597	$	184,969	$	97,890	$	63,736	$	161,626

	Nine Months Ended September 30,
	2020						2019
	Property and Casualty		Accident and Health		Total		Property and Casualty		Accident and Health		Total
Commission revenue	$	48,466	$	75,822	$	124,288	$	68,193	$	57,097	$	125,290
Finance and processing fees	96,212		7,222		103,434		98,218		3,710		101,928
Group health administrative fees	—		91,658		91,658		—		73,861		73,861
Installment fees	78,282		—		78,282		72,782		—		72,782
Late payment fees	23,905		41		23,946		26,061		249		26,310
Other service and fee income	48,948		74,446		123,394		33,102		42,768		75,870
Total	$	295,813	$	249,189	$	545,002	$	298,356	$	177,685	$	476,041
NGHC	$	290,692	$	249,189	$	539,881	$	293,885	$	177,685	$	471,570
Reciprocal Exchanges	5,121		—		5,121		4,471		—		4,471
Total	$	295,813	$	249,189	$	545,002	$	298,356	$	177,685	$	476,041

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

	Three Months Ended September 30,				Nine Months Ended September 30,
Gross Premium Written	2020		2019		2020		2019
Property and Casualty
Personal Auto	$	741,306	$	705,709	$	2,148,730	$	2,083,702
Homeowners	210,721		201,977		581,185		544,056
RV/Packaged	59,191		55,631		170,120		168,796
Small Business Auto	62,159		76,987		195,628		246,694
Lender-placed Insurance	96,327		97,468		295,693		232,265
Other	9,099		16,563		38,631		45,577
Total Property and Casualty	1,178,803		1,154,335		3,429,987		3,321,090
Accident and Health
Group	89,852		73,223		266,857		213,197
Individual	106,085		85,728		305,762		252,719
International	—		3,604		—		126,855
Total Accident and Health	195,937		162,555		572,619		592,771
Total NGHC	$	1,374,740	$	1,316,890	$	4,002,606	$	3,913,861
Reciprocal Exchanges
Personal Auto	$	33,561	$	39,166	$	102,752	$	120,012
Homeowners	63,935		78,079		183,331		222,019
Other	891		1,022		2,593		2,951
Total Reciprocal Exchanges	$	98,387	$	118,267	$	288,676	$	344,982
Total Gross Premium Written	$	1,473,127	$	1,435,157	$	4,291,282	$	4,258,843

	Three Months Ended September 30,				Nine Months Ended September 30,
Net Premium Written	2020		2019		2020		2019
Property and Casualty
Personal Auto	$	650,889	$	560,032	$	1,886,438	$	1,730,904
Homeowners	217,960		82,601		390,760		276,250
RV/Packaged	57,834		52,283		165,694		162,047
Small Business Auto	47,556		56,615		152,584		196,221
Lender-placed Insurance	82,599		61,579		224,742		140,863
Other	4,597		6,860		16,737		15,684
Total Property and Casualty	1,061,435		819,970		2,836,955		2,521,969
Accident and Health
Group	70,672		59,001		209,360		170,911
Individual	103,658		85,541		301,398		252,316
International	—		2,807		—		77,010
Total Accident and Health	174,330		147,349		510,758		500,237
Total NGHC	$	1,235,765	$	967,319	$	3,347,713	$	3,022,206
Reciprocal Exchanges
Personal Auto	$	10,323	$	67,154	$	73,678	$	101,460
Homeowners	18,166		(2,047)		66,758		68,180
Other	1,002		2,178		1,618		2,820
Total Reciprocal Exchanges	$	29,491	$	67,285	$	142,054	$	172,460
Total Net Premium Written	$	1,265,256	$	1,034,604	$	3,489,767	$	3,194,666

	Three Months Ended September 30,				Nine Months Ended September 30,
Net Earned Premium	2020		2019		2020		2019
Property and Casualty
Personal Auto	$	632,781	$	568,346	$	1,773,831	$	1,621,734
Homeowners	130,278		86,525		321,129		272,591
RV/Packaged	52,126		51,023		148,374		150,739
Small Business Auto	53,158		62,265		166,316		189,957
Lender-placed Insurance	77,441		56,599		218,210		158,595
Other	3,287		2,860		16,098		8,893
Total Property and Casualty	949,071		827,618		2,643,958		2,402,509
Accident and Health
Group	70,670		59,009		209,372		170,921
Individual	104,734		85,971		299,535		252,122
International	—		23,923		—		73,489
Total Accident and Health	175,404		168,903		508,907		496,532
NGHC Total	$	1,124,475	$	996,521	$	3,152,865	$	2,899,041
Reciprocal Exchanges
Personal Auto	$	24,654	$	33,953	$	89,291	$	65,907
Homeowners	28,963		22,759		76,037		82,475
Other	481		405		1,153		1,023
Total Reciprocal Exchanges	$	54,098	$	57,117	$	166,481	$	149,405
Total Net Earned Premium	$	1,178,573	$	1,053,638	$	3,319,346	$	3,048,446

	Three Months Ended September 30,				Nine Months Ended September 30,
Fee Income	2020		2019		2020		2019
Property and Casualty
Service and Fee Income	$	94,744	$	96,305	$	290,692	$	293,885
Ceding Commission Income	21,567		40,260		92,657		128,087
Total Property and Casualty	116,311		136,565		383,349		421,972
Accident and Health
Service and Fee Income
Group	44,306		34,848		128,029		98,084
Individual	2,379		2,128		6,861		5,506
Third-Party Fee	41,912		26,760		114,299		74,095
Total Service and Fee Income	88,597		63,736		249,189		177,685
Ceding Commission Income	205		2,261		1,236		8,780
Total Accident and Health	88,802		65,997		250,425		186,465
NGHC Total	$	205,113	$	202,562	$	633,774	$	608,437
Reciprocal Exchanges
Service and Fee Income	$	1,628	$	1,585	$	5,121	$	4,471
Ceding Commission Income	8,952		15,066		33,776		50,446
Total Reciprocal Exchanges	$	10,580	$	16,651	$	38,897	$	54,917
Total Fee Income	$	215,693	$	219,213	$	672,671	$	663,354