Segment Information

6 Months Ended

Jun. 30, 2022

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 liability and physical damage insurance, workers’ compensation insurance primarily for the transportation industry, 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 June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
(millions)	Revenues		Pretax Profit (Loss)		Revenues		Pretax Profit (Loss)		Revenues		Pretax Profit (Loss)		Revenues		Pretax Profit (Loss)
Personal Lines
Agency	$	4,366.5	$	260.3	$	4,220.3	$	207.5	$	8,689.8	$	548.9	$	8,318.5	$	755.0
Direct	4,905.9		198.4		4,633.9		128.4		9,699.5		348.8		9,065.6		543.0
Total Personal Lines1	9,272.4		458.7		8,854.2		335.9		18,389.3		897.7		17,384.1		1,298.0
Commercial Lines	2,304.4		243.0		1,621.8		130.1		4,431.6		445.4		3,039.6		358.6
Property2	570.5		(156.9)		502.3		(83.3)		1,128.6		(148.6)		974.8		(154.0)
Other indemnity3	0.6		(6.3)		4.0		0.1		1.3		(7.2)		4.0		0.1
Total underwriting operations	12,147.9		538.5		10,982.3		382.8		23,950.8		1,187.3		21,402.5		1,502.7
Fees and other revenues4	176.5		NA		176.2		NA		350.5		NA		341.9		NA
Service businesses	80.1		4.6		74.5		6.6		147.8		9.1		128.3		11.1
Investments5	(885.3)		(891.2)		672.5		666.2		(1,088.4)		(1,100.0)		1,478.0		1,466.1
Interest expense	NA		(63.0)		NA		(56.4)		NA		(117.3)		NA		(112.8)
Property - Goodwill impairment2	NA		(224.8)		NA		0		NA		(224.8)		NA		0
Consolidated total	$	11,519.2	$	(635.9)	$	11,905.5	$	999.2	$	23,360.7	$	(245.7)	$	23,350.7	$	2,867.1

NA = Not applicable

1 Personal auto products accounted for 94% of the total Personal Lines segment net premiums earned during the three and six months ended June 30, 2022 and 2021; our special lines products (e.g., motorcycles, ATVs, RVs, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

2 The total pretax loss, including goodwill impairment, for the Property segment was $381.7 million and $373.4 million for the three and six months ended June 30, 2022, respectively. For the three and six months ended June 30, 2022, pretax profit (loss) also included $5.0 million and $19.1 million, respectively, of amortization expense associated with acquisition-related intangible assets attributable to our Property segment, and $14.1 million and $28.3 million for the same periods in 2021.

See Note 12 – Goodwill and Intangible Assets for further discussion.

3 Primarily includes run-off business operations.

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

5 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 June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	Under-writing Margin		Combined Ratio	Under-writing Margin		Combined Ratio	Under-writing Margin		Combined Ratio	Under-writing Margin		Combined Ratio
Personal Lines
Agency	6.0	%	94.0	4.9	%	95.1	6.3	%	93.7	9.1	%	90.9
Direct	4.0		96.0	2.8		97.2	3.6		96.4	6.0		94.0
Total Personal Lines	4.9		95.1	3.8		96.2	4.9		95.1	7.5		92.5
Commercial Lines	10.5		89.5	8.0		92.0	10.1		89.9	11.8		88.2
Property1	(27.5)		127.5	(16.6)		116.6	(13.2)		113.2	(15.8)		115.8
Total underwriting operations	4.4		95.6	3.5		96.5	5.0		95.0	7.0		93.0

1 Included in the three and six months ended June 30, 2022, is 0.9 points and 1.7 points, respectively, of amortization expense associated with intangible assets and 2.8 points and 2.9 points, respectively, for the three and six months ended June 30, 2021.