Note 4. Segment information

Sirius Group classifies its business into four reportable segments-Global Property, Global A&H, Specialty and Casualty (“Specialty & Casualty”), and Runoff and Other (“Runoff & Other”). The accounting policies of the reportable segments are the same as those used for the preparation of the Company’s consolidated financial statements.

The Company’s Global Property, Global A&H, Specialty & Casualty, and Runoff & Other reportable segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to the Company’s chief operating decision maker, the Chief Executive Officer (“CEO”) of the Company. The CEO assesses segment operating performance, allocates capital, and makes resource allocation decisions based on Technical profit (loss), Underwriting profit (loss), and Underwriting profit (loss), including net service fee revenue.

Segment results are shown prior to corporate eliminations. Corporate eliminations are shown to reconcile to consolidated Technical profit (loss), consolidated Underwriting profit (loss) and consolidated Underwriting profit (loss), including net service fee revenue.

Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets, and, accordingly, investment income is not allocated to each segment.

Global Property

Global Property consists of Sirius Group’s underwriting lines of business which offer other property insurance and reinsurance, property catastrophe excess reinsurance, and agriculture reinsurance on a worldwide basis:

Other Property—Sirius Group participates in the broker market for property reinsurance treaties written on a proportional and excess of loss basis. For Sirius Group’s international business, the book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business, primarily in Europe, Asia and Latin America. In the United States, the book predominantly centers on significant participations on proportional and excess of loss treaties mostly in the excess and surplus lines segment of the market.

Property Catastrophe Excess—Property catastrophe excess of loss reinsurance treaties cover losses from catastrophic events. Sirius Group writes a worldwide book with the largest concentration of exposure in Europe and the United States. The U.S. book written in Bermuda has a national account focus supporting principally the lower and/or middle layers of large capacity programs. Additionally, Stockholm writes a U.S. book mainly consisting of select small regional and standard lines carriers. The exposures written in the international book are diversified across many countries, regions, perils and layers.

Agriculture—Sirius Group provides stop-loss reinsurance coverage to companies writing U.S. government-sponsored multi-peril crop insurance (“MPCI”). Sirius Group’s participation is net of the government’s stop-loss reinsurance protection. Sirius Group also provides coverage for crop-hail and certain named perils when bundled with MPCI business. Sirius Group also writes agriculture business outside of the United States.

Global A&H

The Global A&H operating segment consists of Sirius Group’s insurance, reinsurance, and managing general underwriting (“MGU”) units (which include Armada and IMG) that offer accident and health products on a worldwide basis:

Accident and Health insurance and reinsurance—Sirius Group is an insurer of accident and health insurance business in the United States, either on an admitted or surplus lines basis, as well as international business written through wholly-owned IMG. Armada business is written on an admitted basis. Sirius Group also writes proportional and excess reinsurance treaties covering employer medical stop-loss for per person (specific) and per employer (aggregate) exposures. In addition, Sirius Group writes some medical, health, travel and personal accident coverages written on a treaty, facultative and primary basis.

Specialty & Casualty

Specialty & Casualty consists of Sirius Group’s insurance and reinsurance underwriting units which offer specialty & casualty product lines on a worldwide basis. Specialty lines represent unique risks where the more difficult and unusual risks are underwritten. Because specialty lines tend to be the more unusual or higher risks, much of the market is characterized by a high degree of specialization:

Aviation & Space provides aviation insurance that covers loss of or damage to an aircraft and the aircraft operations’ liability to passengers, cargo and hull as well as to third parties. Additionally, liability arising out of non-aircraft operations such as hangars, airports and aircraft products can be covered. Space insurance primarily covers loss of or damage to a satellite during launch and in orbit. The book consists of treaty, written on both a proportional and excess of loss basis, facultative, and primary business.

Marine provides marine reinsurance, primarily written on an excess of loss and proportional basis. Coverage offered includes damage to ships and goods in transit, marine liability lines, and offshore energy industry insurance. Sirius Group also writes yacht business, both on reinsurance and a primary basis. The marine portfolio is diversified across many countries and regions.

Trade Credit writes credit and bond reinsurance worldwide. The bulk of the business is traditional short-term commercial credit insurance, covering pre-agreed domestic and export sales of goods and services with typical coverage periods of 60 to 120 days. Losses under these policies are correlated to adverse changes in a respective country’s gross national product.

Contingency underwrites contingency insurance for event cancellation and non-appearance, primarily on a primary policy and facultative reinsurance basis. Additionally, coverage for liabilities arising from contractual bonus, prize redemption and over-redemption is also offered. The contingency portfolio is diversified across many countries and regions.

Casualty underwrites a cross section of all casualty lines, including general liability, umbrella, auto, workers compensation, professional liability, and other specialty classes, written on a proportional, excess of loss, and primary basis.

Surety underwrites commercial surety bonds, including non-construction contract bonds, in a broad range of business segments in the United States.

Environmental underwrites a pure environmental insurance book in the United States consisting of four core products that revolve around pollution coverage, which are premises pollution liability, contractor’s pollution liability, contractor’s pollution and professional liability.

Runoff & Other

Runoff & Other consists of asbestos risks, environmental risks and other long-tailed liability exposures, and underwriting results from Sirius Global Solutions Holding Company (“Sirius Global Solutions”) and its subsidiaries. Sirius Global Solutions is a Connecticut-based division of Sirius Group specializing in the acquisition and management of runoff liabilities for insurance and reinsurance companies, both in the United States and internationally.

The following tables summarize the segment results for the years ended December 31, 2018, 2017, and 2016:


	For the year ended December 31, 2018
							Specialty &			Runoff &		Corporate
(Millions)	Global Property			Global A&H			Casualty			Other		Elimination		Total
Gross written premiums	$	962.4		$	500.6		$	325.1		$	32.9	$	—	$	1,821.0
Net written premiums	$	655.0		$	379.8		$	292.7		$	29.6	$	—	$	1,357.1
Net earned insurance and reinsurance premiums	$	636.0		$	357.6		$	239.5		$	29.2	$	—	$	1,262.3
Loss and allocated LAE(1)		(518.2)			(189.0)			(142.9)			(13.0)		—		(863.1)
Insurance and reinsurance acquisition expenses		(121.1)			(109.7)			(65.5)			(2.8)		43.7		(255.4)
Technical profit (loss)		(3.3)			58.9			31.1			13.4		43.7		143.8
Unallocated LAE(2)		(10.5)			(5.9)			(5.9)			(1.6)		(13.0)		(36.9)
Other underwriting expenses		(68.2)			(27.4)			(28.2)			(6.3)		(16.1)		(146.2)
Underwriting (loss) income		(82.0)			25.6			(3.0)			5.5		14.6		(39.3)
Service fee revenue(3)		—			115.7			—			—		(44.7)		71.0
Managing general underwriter unallocated LAE(4)		—			(14.0)			—			—		14.0		—
Managing general underwriter other underwriting expenses(5)		—			(16.1)			—			—		16.1		—
General and administrative expenses, MGU + Runoff & Other(6)		—			(53.6)			—			(3.1)		—		(56.7)
Underwriting (loss) income, including net service fee income		(82.0)			57.6			(3.0)			2.4		—		(25.0)
Net investment income		—			—			—			—		—		71.4
Net realized investment gains (losses)		—			—			—			—		—		2.3
Net unrealized investment (losses) gains		—			—			—			—		—		(23.2)
Net foreign exchange gains (losses)		—			—			—			—		—		22.7
Gain on revaluation of contingent consideration		—			—			—			—		—		9.6
Other revenue(7)		—			—			—			—		—		41.7
General and administrative expenses(8)		—			—			—			—		—		(21.2)
Intangible asset amortization expenses		—			—			—			—		—		(15.8)
Impairment of intangible assets		—			—			—			—		—		(8.0)
Interest expense on debt		—			—			—			—		—		(30.8)
Pre-tax income (loss)		—			—			—			—		—	$	23.7
Underwriting Ratios
Loss ratio		83.1	%		54.5	%		62.1	%		NM		NM		71.3	%
Acquisition expense ratio		19.0	%		30.7	%		27.3	%		NM		NM		20.2	%
Other underwriting expense ratio		10.7	%		7.7	%		11.8	%		NM		NM		11.6	%
Combined ratio (9)		112.8	%		92.9	%		101.2	%		NM		NM		103.1	%
Goodwill and intangible assets(10)	$	—		$	588.1		$	—		$	8.1	$	—	$	596.2

⁽¹⁾

Loss and allocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

⁽²⁾

Unallocated LAE are part of Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income (the sum of Loss and allocated LAE and Unallocated LAE is equal to Loss and loss adjustment expenses on the Consolidated Statements of (Loss) Income).

⁽³⁾

Service fee revenue is part of Other revenue on the Consolidated Statements of (Loss) Income (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

⁽⁴⁾

Managing general underwriter unallocated LAE represents IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the claims process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

⁽⁵⁾

Managing general underwriter other underwriting expenses represent IMG and Armada generated operating expenses following their integration with the Accident and Health insurance and reinsurance underwriting unit, representing costs associated with the underwriting process. In prior periods, all Armada and IMG expenses were disclosed within General and administrative expenses, MGU + Runoff & Other.

⁽⁶⁾

General and administrative expenses, MGU + Runoff & Other is part of General and administrative expenses on the Consolidated Statements of (Loss) Income (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

⁽⁷⁾

Other revenue is presented net of Service fee revenue and is comprised mainly of the right of indemnification, gains (losses) from derivatives (see Note 13), and the termination of the call option to purchase The Phoenix Holdings, Ltd. (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

⁽⁸⁾

General and administrative expenses are presented net of General and administrative expenses, MGU + Runoff & Other (the sum of General and administrative expenses, MGU + Runoff & Other and General and administrative expenses is equal to General and administrative expenses on the Consolidated Statements of (Loss) Income).

⁽⁹⁾

Ratios considered not meaningful (“NM”) to Runoff & Other and Corporate Elimination.

⁽¹⁰⁾

Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.


	For the year ended December 31, 2017
							Specialty &			Runoff &		Corporate
(Millions)	Global Property			Global A&H			Casualty			Other		Elimination		Total
Gross written premiums	$	732.1		$	494.6		$	218.1		$	(5.5)	$	—	$	1,439.3
Net written premiums	$	556.2		$	341.5		$	193.0		$	(0.5)	$	—	$	1,090.2
Net earned insurance and reinsurance premiums	$	564.4		$	306.8		$	163.2		$	0.9	$	—	$	1,035.3
Loss and allocated LAE(1)		(499.5)			(175.0)			(99.6)			(11.0)		—		(785.1)
Insurance and reinsurance acquisition expenses		(112.9)			(89.6)			(41.1)			3.5		42.9		(197.2)
Technical profit (loss)		(48.0)			42.2			22.5			(6.6)		42.9		53.0
Unallocated LAE(2)		(12.9)			(4.8)			(5.3)			(3.1)		—		(26.1)
Other underwriting expenses		(63.3)			(23.4)			(16.5)			(2.9)		—		(106.1)
Underwriting (loss) income		(124.2)			14.0			0.7			(12.6)		42.9		(79.2)
Service fee revenue(3)		—			65.9			—			—		(42.9)		23.0
Managing general underwriter unallocated LAE(4)		—			—			—			—		—		—
Managing general underwriter other underwriting expenses(5)		—			—			—			—		—		—
General and administrative expenses, MGU + Runoff & Other(6)		—			(44.8)			—			(4.0)		—		(48.8)
Underwriting (loss) income, including net service fee income		(124.2)			35.1			0.7			(16.6)		—		(105.0)
Net investment income		—			—			—			—		—		56.8
Net realized investment gains (losses)		—			—			—			—		—		(27.2)
Net unrealized investment (losses) gains		—			—			—			—		—		(10.5)
Net foreign exchange gains (losses)		—			—			—			—		—		9.2
Gain on revaluation of contingent consideration		—			—			—			—		—		48.8
Other revenue(7)		—			—			—			—		—		(1.3)
General and administrative expenses(8)		—			—			—			—		—		(43.1)
Intangible asset amortization expenses		—			—			—			—		—		(10.2)
Impairment of intangible assets		—			—			—			—		—		(5.0)
Interest expense on debt		—			—			—			—		—		(22.4)
Pre-tax income (loss)		—			—			—			—		—	$	(109.9)
Underwriting Ratios
Loss ratio		90.8	%		58.6	%		64.3	%		NM		NM		78.4	%
Acquisition expense ratio		20.0	%		29.2	%		25.2	%		NM		NM		19.0	%
Other underwriting expense ratio		11.2	%		7.6	%		10.1	%		NM		NM		10.2	%
Combined ratio (9)		122.0	%		95.4	%		99.6	%		NM		NM		107.6	%
Goodwill and intangible assets(10)	$	—		$	612.3		$	—		$	5.0	$	—	$	617.3

⁽¹⁾

⁽²⁾

⁽³⁾

⁽⁴⁾

⁽⁵⁾

⁽⁶⁾

⁽⁷⁾

Other revenue is presented net of Service fee revenue and is comprised mainly of gains (losses) from derivatives (see Note 13) (the sum of Service fee revenue and Other revenue is equal to Other revenue on the Consolidated Statements of (Loss) Income).

⁽⁸⁾

⁽⁹⁾

Ratios considered not meaningful (“NM”) to Runoff & Other and Corporate Elimination.

⁽¹⁰⁾

Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.


	For the year ended December 31, 2016
							Specialty &			Runoff &		Corporate
(Millions)	Global Property			Global A&H			Casualty			Other		Elimination		Total
Gross written premiums	$	634.9		$	436.1		$	170.7		$	27.3	$	—	$	1,269.0
Net written premiums	$	514.2		$	277.6		$	137.4		$	8.9	$	—	$	938.1
Net earned insurance and reinsurance premiums	$	481.8		$	272.2		$	135.2		$	0.9	$	—	$	890.1
Loss and allocated LAE(1)		(256.6)			(164.8)			(71.2)			(2.6)		—		(495.2)
Insurance and reinsurance acquisition expenses		(100.3)			(71.7)			(37.7)			(0.6)		—		(210.3)
Technical profit (loss)		124.9			35.7			26.3			(2.3)		—		184.6
Unallocated LAE(2)		(11.9)			(6.8)			(4.4)			(1.0)		—		(24.1)
Other underwriting expenses		(65.1)			(23.3)			(15.1)			(3.8)		—		(107.3)
Underwriting (loss) income		47.9			5.6			6.8			(7.1)		—		53.2
Service fee revenue(3)		—			—			—			4.3		—		4.3
Managing general underwriter unallocated LAE(4)		—			—			—			—		—		—
Managing general underwriter other underwriting expenses(5)		—			—			—			—		—		—
General and administrative expenses, MGU + Runoff & Other(6)		—			—			—			(6.2)		—		(6.2)
Underwriting (loss) income, including net service fee income		47.9			5.6			6.8			(9.0)		—		51.3
Net investment income		—			—			—			—		—		56.2
Net realized investment gains (losses)		—			—			—			—		—		288.3
Net unrealized investment (losses) gains		—			—			—			—		—		(238.2)
Net foreign exchange gains (losses)		—			—			—			—		—		(11.0)
Gain on revaluation of contingent consideration		—			—			—			—		—		—
Other revenue(7)		—			—			—			—		—		4.8
General and administrative expenses(8)		—			—			—			—		—		(78.9)
Intangible asset amortization expenses		—			—			—			—		—		—
Impairment of intangible assets		—			—			—			—		—		—
Interest expense on debt		—			—			—			—		—		(34.6)
Pre-tax income (loss)		—			—			—			—		—	$	37.9
Underwriting Ratios
Loss ratio		55.7	%		63.0	%		55.9	%		NM		NM		58.3	%
Acquisition expense ratio		20.8	%		26.3	%		27.9	%		NM		NM		23.6	%
Other underwriting expense ratio		13.5	%		8.6	%		11.2	%		NM		NM		12.1	%
Combined ratio (9)		90.0	%		97.9	%		95.0	%		NM		NM		94.0	%
Goodwill and intangible assets(10)	$	—		$	—		$	—		$	5.0	$	—	$	5.0

⁽¹⁾

⁽²⁾

⁽³⁾

⁽⁴⁾

⁽⁵⁾

⁽⁶⁾

⁽⁷⁾

⁽⁸⁾

⁽⁹⁾

Ratios considered not meaningful (“NM”) to Runoff & Other and Corporate Elimination.

⁽¹⁰⁾

Sirius Group does not allocate its assets by segment, with the exception of goodwill and intangible assets.

The following tables provide summary information regarding net premiums written by client location and underwriting location by reportable segment for the years ended December 31, 2018, 2017, and 2016:


	For the year ended December 31, 2018
					Specialty &		Runoff &
(Millions)	Global Property		Global A&H		Casualty		Other		Total
Net written premiums by client location:
United States	$	284.4	$	307.7	$	173.4	$	29.2	$	794.7
Europe		171.3		30.4		74.8		—		276.5
Canada, the Caribbean, Bermuda and Latin America		78.3		12.5		12.8		—		103.6
Asia and Other		121.0		29.2		31.7		0.4		182.3
Total net written premium by client location	$	655.0	$	379.8	$	292.7	$	29.6	$	1,357.1
Net written premiums by underwriting location:
United States	$	31.6	$	109.5	$	9.8	$	29.2	$	180.1
Europe		304.9		224.9		162.3		—		692.1
Canada, the Caribbean, Bermuda and Latin America		270.6		44.7		118.5		—		433.8
Asia and Other		47.9		0.7		2.1		0.4		51.1
Total written premiums by underwriting location	$	655.0	$	379.8	$	292.7	$	29.6	$	1,357.1


	For the year ended December 31, 2017
					Specialty &		Runoff &
(Millions)	Global Property		Global A&H		Casualty		Other		Total
Net written premiums by client location:
United States	$	220.8	$	284.5	$	59.0	$	(1.2)	$	563.1
Europe		142.4		28.2		91.7		—		262.3
Canada, the Caribbean, Bermuda and Latin America		93.0		9.5		8.7		0.2		111.4
Asia and Other		100.0		19.3		33.6		0.5		153.4
Total net written premium by client location	$	556.2	$	341.5	$	193.0	$	(0.5)	$	1,090.2
Net written premiums by underwriting location:
United States	$	54.4	$	98.2	$	(1.0)	$	(1.1)	$	150.5
Europe		239.4		196.4		147.5		—		583.3
Canada, the Caribbean, Bermuda and Latin America		225.2		46.4		43.9		—		315.5
Asia and Other		37.2		0.5		2.6		0.6		40.9
Total written premiums by underwriting location	$	556.2	$	341.5	$	193.0	$	(0.5)	$	1,090.2


	For the year ended December 31, 2016
					Specialty &		Runoff &
(Millions)	Global Property		Global A&H		Casualty		Other		Total
Net written premiums by client location:
United States	$	214.8	$	211.7	$	28.4	$	8.1	$	463.0
Europe		146.0		34.0		78.9		—		258.9
Canada, the Caribbean, Bermuda and Latin America		67.4		9.4		11.3		0.2		88.3
Asia and Other		86.0		22.5		18.8		0.6		127.9
Total net written premium by client location	$	514.2	$	277.6	$	137.4	$	8.9	$	938.1
Net written premiums by underwriting location:
United States	$	192.9	$	111.6	$	6.5	$	8.3	$	319.3
Europe		238.3		164.2		128.8		—		531.3
Canada, the Caribbean, Bermuda and Latin America		50.1		1.4		—		—		51.5
Asia and Other		32.9		0.4		2.1		0.6		36.0
Total written premiums by underwriting location	$	514.2	$	277.6	$	137.4	$	8.9	$	938.1