6. Discontinued Operations

Prior to April 1, 2017, the Company also conducted business in the United Kingdom (“U.K.”) through certain subsidiaries of PSIH, which was incorporated in 2011 as a Bermuda holding company.

PSIH acquired several entities in the U.K. in order to build Lloyd’s Syndicate 1110 (“Syndicate”). The Company changed its strategic direction with respect to its U.K. operations and placed the Syndicate into run-off. The Company then entered into a two-phase sale transaction to exit its U.K. operations, which closed in October 2017 and March 2018. There was no gain or loss recognized from the sale of the U.K. operations.

In terms of the sale agreement, the Company will continue to meet Funds at Lloyd’s (“FAL”) obligations with respect to the Syndicate. In that regard, at December 31, 2019, the Company deposited cash and securities of $10.4 million and arranged for placement $23.2 million in Letters of Credit and securities.

As part of the Company’s exit from the insurance market in U.K., all of the Syndicate’s reinsurance of the Company’s U.S. based insurance companies was commuted, and business sourced by PSIB to the Syndicate was reinsured back to the Company’s U.S. based insurance subsidiaries via 100% quota share reinsurance provided by New York Marine.

In connection with the above sale, the Company provided Aggregate Stop Loss reinsurance protection for development of the Syndicate covered reserves for which the Company has a liability of $24.0 million and $13.3 million as of December 31, 2019 and 2018, respectively. Additionally and also effective April 1, 2017, the Company assumed fully future and in force obligations of the Syndicate with respect to business underwritten by the Company’s U.S. based operations on Syndicate paper.

Prior to its exit from the U.K. insurance market, the Company assigned functional currencies to its foreign operations, which are generally the currencies of the local operating environment. Foreign currency amounts are remeasured to the functional currency, and the resulting foreign exchange gains or losses are reflected in earnings, except for foreign currency translation differences that arise in conjunction with the recognition of unrealized gains or losses on AFS investments which are recognized in OCI. Functional currency amounts are then translated into U.S. dollars. The foreign currency remeasurement and translation are calculated using current exchange rates for items reported in the balance sheets and average exchange rates for items recorded in earnings. The resulting foreign currency translation gain or loss during the year, is a component of OCI. A foreign transaction gain of $4.6 million was recorded for the year ended December 31, 2017. These amounts are included in the net loss from discontinued operations in the consolidated statements of operations for the year ended December 31, 2017.

Loss from discontinued operations, net of taxes in its consolidated statements of operations are comprised of the following:


	Years Ended December 31
($ in thousands)	2019		2018		2017
Revenues
Net earned premiums	$	611	$	1,173	$	49,233
Net investment income		142		514		2,717
Realized investment gains, net		1,267		830		14,329
Other income		—		338		—
Total revenue		2,020		2,855		66,279

Expenses
Net losses and loss adjustment expenses incurred		10,463		11,197		50,787
Policy acquisition expenses		218		401		9,544
General and administrative expenses		57		(8,401)		27,533
Interest expense		—		218		1,648
Foreign exchange gains		—		—		(4,570)
Other expense		—		—		19,105
Total expenses		10,738		3,415		104,047
Loss from discontinued operations before income taxes		(8,718)		(560)		(37,768)
Income tax benefit		(2,114)		(1,374)		(679)
Net (loss) income from discontinued operations	$	(6,604)	$	814	$	(37,089)

The following represents the carrying amounts of assets and liabilities associated with the exit from the insurance market in the U.K. reported as discontinued operations in its consolidated balance sheets:


	December 31
($ in thousands)	2019		2018
Assets
Total cash and investments	$	10,428	$	10,436
Other assets		11,156		9,283
Total assets	$	21,584	$	19,719

Liabilities
Unpaid losses and loss adjustment expenses	$	24,169	$	14,030
Other liabilities		7,409		8,226
Total liabilities	$	31,578	$	22,256