Segment Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information — Our Personal Lines segment writes insurance for personal autos and recreational vehicles (our special lines products). Our Commercial Lines segment writes auto-related primary liability and physical damage insurance, and business-related general liability and property insurance, predominately for small businesses. Our Property segment writes residential property insurance for homeowners, other property owners, and renters. Our service businesses provide insurance-related services, including processing Commercial Automobile Insurance Procedures/Plans (CAIP) business and serving as an agent for homeowners, general liability, and workers’ compensation insurance, among other products, through programs in our direct Personal Lines and Commercial Lines businesses. All segment revenues are generated from external customers; all intercompany transactions are eliminated in consolidation.

Following are the operating results for the respective periods:

	Three Months Ended March 31,
	2021				2020
(millions)	Revenues		Pretax Profit (Loss)		Revenues		Pretax Profit (Loss)
Personal Lines
Agency	$	4,098.2	$	547.5	$	3,828.7	$	601.6
Direct	4,431.7		414.6		3,992.4		473.0
Total Personal Lines1	8,529.9		962.1		7,821.1		1,074.6
Commercial Lines	1,417.8		228.5		1,189.0		112.5
Property2	472.5		(70.7)		420.6		49.2
Total underwriting operations	10,420.2		1,119.9		9,430.7		1,236.3
Fees and other revenues3	165.7		NA		153.5		NA
Service businesses	53.8		4.5		51.6		4.1
Investments4	805.5		799.9		(312.4)		(317.7)
Interest expense	NA		(56.4)		NA		(48.0)
Consolidated total	$	11,445.2	$	1,867.9	$	9,323.4	$	874.7

NA = Not applicable

1 Personal auto insurance accounted for 94% of the total Personal Lines segment net premiums earned during the three months ended March 31, 2021 and 2020; insurance for our special lines products (e.g., motorcycles, ATVs, RVs, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

2 For the three months ended March 31, 2021 and 2020, pretax profit (loss) includes $14.2 million and $14.5 million, respectively, of amortization expense predominately associated with intangible assets. See Note 12 – Goodwill and Intangible Assets for further discussion.

3 Pretax profit (loss) for fees and other revenues is allocated to operating segments.

4 Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit is net of investment expense.

Our management uses underwriting margin and combined ratio as primary measures of underwriting profitability. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned (i.e., revenues from underwriting operations). Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. Combined ratio is the complement of the underwriting margin. Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:

	Three Months Ended March 31,
	2021			2020
	Underwriting Margin		Combined Ratio	Underwriting Margin		Combined Ratio
Personal Lines
Agency	13.4	%	86.6	15.7	%	84.3
Direct	9.4		90.6	11.9		88.1
Total Personal Lines	11.3		88.7	13.7		86.3
Commercial Lines	16.1		83.9	9.5		90.5
Property1	(15.0)		115.0	11.7		88.3
Total underwriting operations	10.7		89.3	13.1		86.9

1 Included in the three months ended March 31, 2021 and 2020, is 3.0 points and 3.4 points, respectively, of amortization expense predominately associated with intangible assets.