Segment Information

12 Months Ended

Dec. 31, 2019

The Company has four reportable segments, three of which are separately managed business units and the fourth (“Corporate and Other”) includes the Company’s remaining operations. The Excess and Surplus Lines segment primarily offers commercial excess and surplus lines liability and excess property insurance products. The Specialty Admitted Insurance segment offers workers’ compensation insurance coverage as well as specialty admitted fronting and program business. The Casualty Reinsurance segment offers commercial liability and non-catastrophe property reinsurance to U.S. insurance companies and to the Company’s U.S.-based insurance subsidiaries. The Corporate and Other segment consists of certain management and treasury activities of James River Group, James River UK, and JRG Holdings as well as interest expense associated with senior debt and Junior Subordinated Debt, and investment income from investments classified as trading or other invested assets. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

Segment revenues for each reportable segment consist of net earned premiums, net investment income, and realized and unrealized (losses) gains on investments. Segment profit (loss) for each reportable segment is measured by underwriting profit (loss), which is generally defined as net earned premiums less losses and loss adjustment expenses and other operating expenses of the operating segments. Gross fee income of the Excess and Surplus Lines segment is included in that segment’s underwriting profit (loss). Gross fee income of $9.1 million, $13.9 million and $17.0 million was included in underwriting profit for the years ended December 31, 2019, 2018 and 2017, respectively. Segment results are reported prior to the effects of the intercompany reinsurance agreements between the Company’s insurance subsidiaries. All gross written premiums and net earned premiums for all periods presented were generated from policies issued to U.S. based insureds.



	Excess and Surplus Lines		Specialty Admitted Insurance		Casualty Reinsurance			Corporate and Other		Total
	(in thousands)
As of and for the Year Ended December 31, 2019
Gross written premiums	$	922,320	$	387,642	$	160,773		$	—	$	1,470,735
Net earned premiums	625,528		54,338		143,880			—		823,746
Segment revenues	657,501		61,241		183,700			4,683		907,125
Net investment income	21,358		3,802		46,325			4,167		75,652
Interest expense	—		—		—			10,596		10,596
Underwriting profit (loss) of operating segments	19,157		5,913		(7,161		)	—		17,909
Segment goodwill	181,831		—		—			—		181,831
Segment assets	2,481,934		786,433		1,699,473			56,565		5,024,405



As of and for the Year Ended December 31, 2018
Gross written premiums	$	656,538	$	374,346	$	135,889	$	—	$	1,166,773
Net earned premiums	555,684		55,146		204,568		—		815,398
Segment revenues	580,785		56,717		243,178		4,919		885,599
Net investment income	14,456		3,262		38,838		4,700		61,256
Interest expense	—		—		—		11,553		11,553
Underwriting profit of operating segments	42,834		6,972		5,103		—		54,909
Segment goodwill	181,831		—		—		—		181,831
Segment assets	972,111		633,689		1,453,754		77,222		3,136,776



As of and for the Year Ended December 31, 2017
Gross written premiums	$	530,120	$	316,430	$	235,355		$	—	$	1,081,905
Net earned premiums	463,521		68,110		209,478			—		741,109
Segment revenues	493,853		70,366		240,751			12,655		817,625
Net investment income	15,014		2,532		31,507			12,066		61,119
Interest expense	—		—		—			8,974		8,974
Underwriting profit (loss) of operating segments	29,693		3,166		(1,765		)	—		31,094
Segment goodwill	181,831		—		—			—		181,831
Segment assets	843,486		439,416		1,379,866			93,927		2,756,695

The following table reconciles the underwriting profit (loss) of operating segments by individual segment to income before taxes:



	Year Ended December 31,
	2019			2018			2017
	(in thousands)
Underwriting profit (loss) of the operating segments:
Excess and Surplus Lines	$	19,157		$	42,834		$	29,693
Specialty Admitted Insurance	5,913			6,972			3,166
Casualty Reinsurance	(7,161		)	5,103			(1,765		)
Total underwriting profit of operating segments	17,909			54,909			31,094
Other operating expenses of the Corporate and Other segment	(27,664		)	(26,903		)	(25,330		)
Underwriting (loss) profit	(9,755		)	28,006			5,764
Net investment income	75,652			61,256			61,119
Net realized and unrealized losses on investments	(2,919		)	(5,479		)	(1,989		)
Other income	1,137			505			361
Other expenses	(1,055		)	(1,300		)	(539		)
Interest expense	(10,596		)	(11,553		)	(8,974		)
Amortization of intangible assets	(597		)	(597		)	(597		)
Income before income taxes	$	51,867		$	70,838		$	55,145

The Company currently has 15 underwriting divisions, including 13 in the Excess and Surplus Lines segment, one in the Specialty Admitted Insurance segment, and one in the Casualty Reinsurance segment. Each underwriting division focuses on a specific industry group or coverage.

Gross written premiums by segment and underwriting division are presented below:



	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Commercial Auto	$	405,565	$	322,126	$	247,960
Excess Casualty	118,954		66,452		51,160
General Casualty	115,832		54,127		38,097
Manufacturers and Contractors	105,096		79,160		85,719
Energy	45,442		33,942		29,704
Excess Property	31,606		16,963		14,447
Allied Health	26,713		30,450		19,181
Life Sciences	24,462		16,636		12,981
Small Business	19,725		14,808		11,307
Environmental	16,539		10,499		7,920
Professional Liability	6,441		5,916		6,326
Sports and Entertainment	4,212		3,685		3,021
Medical Professionals	1,733		1,774		2,297
Total Excess and Surplus Lines segment	922,320		656,538		530,120
Specialty Admitted Insurance segment	387,642		374,346		316,430
Casualty Reinsurance segment	160,773		135,889		235,355
Total	$	1,470,735	$	1,166,773	$	1,081,905

The Company does business with three brokers that generated $472.6 million, $115.2 million and $98.6 million of gross written premiums for the Excess and Surplus Lines segment for the year ended December 31, 2019, representing 32.1% (BB&T

Insurance Services), 7.8% and 6.7% of consolidated gross written premiums and 51.2%, 12.5% and 10.7% of the Excess and Surplus Lines segment’s gross written premiums, respectively. The Company has agency contracts with various branches within the aforementioned brokers. No other broker generated 10.0% or more of the gross written premiums for the Excess and Surplus Lines segment for the year ended December 31, 2019. The Company did business with one insured (Rasier, whose insurance policies were canceled as of December 31, 2019) that generated $374.2 million of gross written premiums and $9.1 million of gross fee income for the Excess and Surplus Lines segment for the year ended December 31, 2019, representing 25.4% of consolidated gross written premiums and 40.6% of the Excess and Surplus Lines segment’s gross written premiums. No other insured generated 10.0% or more of the gross written premiums for the Excess and Surplus Lines segment.

The Specialty Admitted Insurance segment accepts applications for insurance from a variety of sources, including independent retail agents, program administrators and managing general agents (“MGAs”). The Company does business with two agencies that generated $146.5 million (Atlas General Insurance Services) and $53.2 million of gross written premiums for the Specialty Admitted Insurance segment for the year ended December 31, 2019, representing 10.0% and 3.6% of the consolidated gross written premiums and 37.8% and 13.7% of the Specialty Admitted Insurance segment’s gross written premiums, respectively. No other agency generated 10.0% or more of the gross written premiums for the Specialty Admitted Insurance segment for the year ended December 31, 2019.

The Company does business with four brokers that generated $53.7 million, $45.1 million, $42.4 million, and $16.7 million of gross written premiums for the Casualty Reinsurance segment for the year ended December 31, 2019, representing 3.7%, 3.1%, 2.9%, and 1.1% of consolidated gross written premiums and 33.4%, 28.1%, 26.4%, and 10.4% of the Casualty Reinsurance segment’s gross written premiums, respectively. No other broker generated 10.0% or more of the gross written premiums for the Casualty Reinsurance segment for the year ended December 31, 2019. The Casualty Reinsurance segment assumed business from three unaffiliated ceding companies that generated $96.4 million, $30.7 million, and $22.6 million of gross written premiums for the year ended December 31, 2019, representing 6.6%, 2.1%, and 1.5% of consolidated gross written premiums and 59.9%, 19.1%, and 14.0% of the Casualty Reinsurance segment’s gross written premiums, respectively.