Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information [Abstract]

Segment Information

Note 3 — Segment Information

We segregate our business into two segments: insurance operations and other. The insurance operations are further classified into three divisions: excess and surplus lines (E&S), alternative risk transfer (ART) and assumed reinsurance (Assumed Re). E&S consists of seven product lines: environmental, primary casualty, excess, property, surety, healthcare, and professional liability. ART consists of two product lines: specialty programs and fully funded. Assumed Re consists of property and casualty business assumed from unaffiliated specialty insurers and reinsurers. Other includes lines of business that we no longer underwrite (run-off) and other ancillary product lines. Prior year amounts have been reclassified to conform to the current year presentation.

Within E&S, our environmental insurance products provide general contractor pollution and/or professional liability coverage for contractors and consultants in the environmental remediation industry and property owners. Primary casualty provides general liability insurance for residential and commercial contractors as well as general liability and product liability for smaller manufacturers, distributors, non-habitational real estate and certain real property owner, landlord and tenant risks. Excess provides excess and umbrella liability coverages over our own and other carriers’ primary casualty polices. Our property product encompasses surplus lines commercial property business and commercial multi-peril (CMP) policies. Surety provides payment and performance bonds primarily to the environmental remediation and construction industries. Healthcare provides customized liability insurance solutions primarily for long-term care facilities. Professional Liability provides miscellaneous liability and professional liability coverage on both a primary and excess basis. Professional liability coverage is provided to lawyers, insurance agents, and other businesses, while miscellaneous liability coverage is provided to private and not for profit entities and, to a lesser extent, public companies.

In our ART division, specialty programs provide insurance to homogeneous niche groups through third party program managers. Our specialty programs consist primarily of property and casualty insurance coverages for certain classes of specialty risks including, but not limited to, construction contractors, pest control operators, auto dealers, real estate brokers, consultants, and restaurant and tavern owners. Fully funded policies provide our insureds the ability to fund their liability exposure via a self-insurance vehicle for which we generate fee income. We write fully funded general and professional liability for businesses operating primarily in the healthcare and construction industries.

Our Assumed Reinsurance division offers property and casualty reinsurance products in the form of treaty and facultative contracts targeting specialty insurers, risk retention groups and captives. We provide this coverage on an excess of loss and, to a lesser extent, a quota share basis. We reinsure casualty business, which includes medical malpractice, general liability, commercial auto, professional liability and workers’ compensation. The assumed reinsurance division also participates in one property catastrophe treaty that provides a maximum of $15 million of coverage over the treaty period. The treaty covers world-wide property catastrophe losses including hurricanes and earthquakes.

Our Other segment includes lines of business that we have placed in run-off, such as workers’ compensation, excess liability insurance for municipalities, other commercial lines, real estate and other ancillary product lines.

The Company measures segments using net income, total assets and total equity. The reportable insurance divisions are measured based on underwriting profit (loss) and pre-tax operating income (loss).

The following table presents key financial data by segment for the three months ended September 30, 2011 and 2010, respectively (dollars in thousands):

	Three Months Ended September 30, 2011
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	39,782		$	18,952		$	14,512		$			$	73,246
Net written premiums		31,621			14,040			14,559						60,220
Net earned premiums		30,752			15,552			12,688						58,992
Fee & other income		(8	)		806						57			855
Losses & loss adjustment expenses		19,019			8,466			8,382						35,867
Acquisition & other underwriting expenses		13,326			6,610			4,517			288			24,741
Underwriting profit (loss)		(1,601	)		1,282			(211	)		(231	)		(761	)
Net investment income		5,280			1,186			1,593			137			8,196
Pre-tax operating income (loss)		3,679			2,468			1,382			(94	)		7,435
Net realized gains														10
Interest and corporate expenses														548
Earnings before income taxes														6,897
Income tax expense														1,169
Net earnings													$	5,728
Less: Net earnings attributable to the non- controlling interest														(69	)
Net earnings attributable to ASIH, Ltd.													$	5,797
Loss ratio		61.8	%		54.4	%		66.1	%	*NM				60.8	%
Expense ratio		43.4	%		37.3	%		35.6	%	NM				40.5	%
Combined ratio**		105.2	%		91.8	%		101.6	%	NM				101.3	%
	Three Months Ended September 30, 2010
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	34,121		$	24,847		$	12,971		$	(6	)	$	71,933
Net written premiums		27,423			17,063			12,258			(6	)		56,738
Net earned premiums		26,347			15,114			11,765			(6	)		53,220
Fee & other income		43			1,150			57			(36	)		1,214
Losses & loss adjustment expenses		15,094			8,033			8,258			(7	)		31,378
Acquisition & other underwriting expenses		12,414			6,345			3,326			304			22,389
Underwriting profit (loss)		(1,118	)		1,886			238			(339	)		667
Net investment income		5,286			1,366			1,488			125			8,265
Pre-tax operating income (loss)		4,168			3,252			1,726			(214	)		8,932
Net realized gains														560
Interest and corporate expenses														1,551
Earnings before income taxes														7,941
Income tax expense														635
Net earnings													$	7,306
Less: Net earnings attributable to the non- controlling interest														104
Net earnings attributable to ASIH, Ltd.													$	7,202
Loss ratio		57.3	%		53.1	%		70.2	%	*NM				59.0	%
Expense ratio		46.1	%		34.4	%		27.7	%	NM				39.3	%
Combined ratio**		103.4	%		87.5	%		97.9	%	NM				98.3	%

*	NM = Ratio is not meaningful
**	The combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses net of fee income to earned premiums.

The following table presents key financial data by segment for the nine months ended September 30, 2011 and 2010, respectively (dollars in thousands):

	Nine Months Ended September 30, 2011
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	119,706		$	64,753		$	46,012		$	(1	)	$	230,470
Net written premiums		95,636			46,086			44,925			(1	)		186,646
Net earned premiums		87,831			45,523			39,158			(1	)		172,511
Fee & other income		(8	)		2,436						101			2,529
Losses & loss adjustment expenses		54,657			30,310			33,030			—			117,997
Acquisition & other underwriting expenses		39,652			19,071			11,726			(132	)		70,317
Underwriting profit (loss)		(6,486	)		(1,422	)		(5,598	)		232			(13,274	)
Net investment income		15,176			3,538			4,528			440			23,682
Pre-tax operating income (loss)		8,690			2,116			(1,070	)		672			10,408
Net realized gains														11,311
Interest and corporate expenses														2,927
Earnings before income taxes														18,792
Income tax expense														588
Net earnings													$	18,204
Less: Net earnings attributable to the non- controlling interest														454
Net earnings attributable to ASIH, Ltd.													$	17,750
Loss ratio		62.2	%		66.6	%		84.4	%	*NM				68.4	%
Expense ratio		45.2	%		36.5	%		29.9	%	NM				39.3	%
Combined ratio**		107.4	%		103.1	%		114.3	%	NM				107.7	%
	Nine Months Ended September 30, 2010
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	100,227		$	66,966		$	36,641		$	(6	)	$	203,828
Net written premiums		81,251			48,501			33,539			(6	)		163,285
Net earned premiums		72,741			39,178			31,515			(6	)		143,428
Fee & other income		392			2,854			228			18			3,492
Losses & loss adjustment expenses		41,977			22,927			21,132			(6	)		86,030
Acquisition & other underwriting expenses		35,842			14,769			9,297			982			60,890
Underwriting profit (loss)		(4,686	)		4,336			1,314			(964	)		—
Net investment income		16,120			3,634			3,753			592			24,099
Pre-tax operating income		11,434			7,970			5,067			(372	)		24,099
Net realized gains														2,080
Interest and corporate expenses														4,461
Earnings before income taxes														21,718
Income tax expense														1,486
Net earnings													$	20,232
Less: Net earnings attributable to the non- controlling interest														360
Net earnings attributable to ASIH, Ltd.													$	19,872
Loss ratio		57.7	%		58.5	%		67.1	%	*NM				60.0	%
Expense ratio		48.4	%		30.4	%		28.8	%	NM				39.8	%
Combined ratio**		106.1	%		88.9	%		95.9	%	NM				99.8	%

*	NM = Ratio is not meaningful
**	The combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses net of fee income to earned premiums.

The Company conducts business in the United States and Bermuda. The following table provides financial data attributable to the geographic locations for the three months ended September 30, 2011 and 2010 (dollars in thousands):

	United States		Bermuda		Total
September 30, 2011
Income tax expense	$	1,169	$	—	$	1,169
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	2,198	$	3,599	$	5,797

	United States		Bermuda		Total
September 30, 2010
Income tax expense	$	635	$	—	$	635
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	1,117	$	6,085	$	7,202

The following table provides financial data attributable to the geographic locations for the nine months ended September 30, 2011 and 2010 (dollars in thousands):

	United States		Bermuda		Total
September 30, 2011
Income tax expense	$	588	$	—	$	588
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	799	$	16,951	$	17,750
Assets	$	664,526	$	612,873	$	1,277,399
Equity	$	111,130	$	228,819	$	339,949

	United States		Bermuda		Total
September 30, 2010
Income tax expense	$	1,486	$	—	$	1,486
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	3,331	$	16,541	$	19,872
Assets	$	658,436	$	562,276	$	1,220,712
Equity	$	111,390	$	211,008	$	322,398