Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

Segment Information

We evaluate the results of our four reportable segments as follows:

•Our Standard Commercial Lines, Standard Personal Lines, and E&S Lines are evaluated on before and after-tax underwriting results (net premiums earned, incurred loss and loss expense, policyholder dividends, policy acquisition costs, and other underwriting expenses), return on equity ("ROE") contribution, and combined ratios.

•Our Investments segment is primarily evaluated on after-tax net investment income and its ROE contribution. After-tax net realized and unrealized gains and losses, which are not included in non-GAAP operating income, are also included in our Investment segment results.

In computing each segment's results, we do not make adjustments for interest expense or corporate expenses. No segment has a separate investment portfolio or allocated assets.

The following summaries present revenues (net investment income and net realized and unrealized gains and losses on investments for the Investments segment) and pre-tax income for the individual segments:

Revenue by Segment	Quarter ended September 30,			Nine Months ended September 30,
($ in thousands)	2020		2019	2020	2019
Standard Commercial Lines:
Net premiums earned:
Commercial automobile	$	160,937	141,182	449,162	408,706
Workers compensation	75,595		75,478	204,207	232,657
General liability	181,459		169,084	509,312	495,402
Commercial property	97,997		89,215	287,279	262,418
Businessowners policies	27,605		26,371	82,157	78,624
Bonds	9,226		8,990	28,075	26,861
Other	5,266		4,841	15,477	14,326
Miscellaneous income	5,521		2,782	11,107	7,544
Total Standard Commercial Lines revenue	563,606		517,943	1,586,776	1,526,538
Standard Personal Lines:
Net premiums earned:
Personal automobile	42,458		43,226	123,134	129,777
Homeowners	31,395		31,529	94,537	95,672
Other	2,123		1,983	6,066	5,709
Miscellaneous income	598		380	1,520	991
Total Standard Personal Lines revenue	76,574		77,118	225,257	232,149
E&S Lines:
Net premiums earned:
Casualty lines	43,650		47,171	130,444	136,455
Property lines	16,830		14,550	47,065	42,205
Total E&S Lines revenue	60,480		61,721	177,509	178,660
Investments:
Net investment income	68,185		55,826	158,596	164,949
Net realized and unrealized investment gains (losses)	7,721		(2,183)	(24,296)	15,295
Total Investments revenue	75,906		53,643	134,300	180,244
Total revenues	$	776,566	710,425	2,123,842	2,117,591

Income Before and After Federal Income Tax	Quarter ended September 30,				Nine Months ended September 30,
($ in thousands)	2020			2019	2020	2019
Standard Commercial Lines:
Underwriting gain, before federal income tax	$	42,718		30,016	76,574	92,974
Underwriting gain, after federal income tax	33,746			23,713	60,493	73,450
Combined ratio	92.3		%	94.2	95.1	93.9
ROE contribution	5.7			4.5	3.5	5.0
Standard Personal Lines:
Underwriting (loss) gain, before federal income tax	$	(14,404)		(631)	(20,342)	7,074
Underwriting (loss) gain, after federal income tax	(11,379)			(499)	(16,070)	5,588
Combined ratio	119.0		%	100.8	109.1	96.9
ROE contribution	(1.9)			(0.1)	(0.9)	0.4
E&S Lines:
Underwriting (loss) gain, before federal income tax	$	(7,277)		1,916	(3,965)	9,439
Underwriting (loss) gain, after federal income tax	(5,748)			1,514	(3,132)	7,457
Combined ratio	112.0		%	96.9	102.2	94.7
ROE contribution	(1.0)			0.3	(0.2)	0.5
Investments:
Net investment income	$	68,185		55,826	158,596	164,949
Net realized and unrealized investment gains (losses)	7,721			(2,183)	(24,296)	15,295
Total investment segment income, before federal income tax	75,906			53,643	134,300	180,244
Tax on investment segment income	14,676			10,884	24,338	34,733
Total investment segment income, after federal income tax	$	61,230		42,759	109,962	145,511
ROE contribution of after-tax net investment income	9.4			8.6	7.5	9.1

Reconciliation of Segment Results to Income Before Federal Income Tax	Quarter ended September 30,			Nine Months ended September 30,
($ in thousands)	2020		2019	2020	2019
Underwriting gain
Standard Commercial Lines	$	42,718	30,016	76,574	92,974
Standard Personal Lines	(14,404)		(631)	(20,342)	7,074
E&S Lines	(7,277)		1,916	(3,965)	9,439
Investment income	75,906		53,643	134,300	180,244
Total all segments	96,943		84,944	186,567	289,731
Interest expense	(7,781)		(7,397)	(23,310)	(26,289)
Corporate expenses	(3,905)		(6,369)	(19,310)	(28,345)
Income, before federal income tax	$	85,257	71,178	143,947	235,097