Segments

9 Months Ended

Sep. 30, 2012

Segments [Abstract]

Segments

(10) Segments

We report HCC's results in six operating segments, including the following five insurance segments:

• U.S. Property & Casualty
• Professional Liability
• Accident & Health
• U.S. Surety & Credit
• International

The Investing segment includes our consolidated investment portfolio, as well as all investment income, investment related expenses, realized investment gains and losses, and other-than-temporary impairment credit losses on investments. All investment activity is reported as revenue, consistent with our consolidated presentation.

In addition to our segments, we include a Corporate & Other category to reconcile segment results to consolidated totals. The Corporate & Other category includes corporate operating expenses not allocable to the segments, interest expense on long-term debt, foreign currency expense (benefit), and underwriting results of our Exited Lines.

Our Exited Lines include product lines that we no longer write and do not expect to write in the future. In the third quarter of 2012, we exited the HMO and medical excess reinsurance businesses that had previously been included in our Accident & Health segment. We have recast all prior financial data to report these two lines of business in Exited Lines for all periods presented.

The following tables present information by business segment.

			U.S. Property & Casualty		Professional Liability		Accident & Health		U.S. Surety & Credit		International		Investing		Corporate & Other		Consolidated
Nine months ended September 30, 2012
Net earned premium			$	265,593	$	298,454	$	624,077	$	154,232	$	302,303	$	0	$	31,463	$	1,676,122
Other revenue				15,300		799		3,589		659		2,766		174,133		116		197,362
	Segment revenue			280,893		299,253		627,666		154,891		305,069		174,133		31,579		1,873,484
Loss and LAE				154,156		170,506		447,262		42,444		126,547		0		28,852		969,767
Other expense				89,348		49,621		93,127		83,402		108,018		0		75,303		498,819
	Segment expense			243,504		220,127		540,389		125,846		234,565		-		104,155		1,468,586
		Segment pretax earnings (loss)	$	37,389	$	79,126	$	87,277	$	29,045	$	70,504	$	174,133	$	(72,576)	$	404,898

			U.S. Property & Casualty		Professional Liability		Accident & Health		U.S. Surety & Credit		International		Investing		Corporate & Other		Consolidated
Nine months ended September 30, 2011
Net earned premium			$	245,121	$	307,240	$	568,318	$	153,309	$	267,458	$	0	$	35,541	$	1,576,987
Other revenue				16,556		358		3,468		955		2,791		158,472		(503)		182,097
	Segment revenue			261,677		307,598		571,786		154,264		270,249		158,472		35,038		1,759,084
Loss and LAE				148,783		257,632		411,851		42,351		175,635		0		25,988		1,062,240
Other expense				82,202		40,055		89,228		82,909		99,754		0		60,120		454,268
	Segment expense			230,985		297,687		501,079		125,260		275,389		-		86,108		1,516,508
		Segment pretax earnings (loss)	$	30,692	$	9,911	$	70,707	$	29,004	$	(5,140)	$	158,472	$	(51,070)	$	242,576

Three months ended September 30, 2012
Net earned premium			$	87,741	$	97,549	$	209,049	$	53,388	$	105,831	$	0	$	10,092	$	563,650
Other revenue				8,415		532		1,095		244		631		57,183		(77)		68,023
	Segment revenue			96,156		98,081		210,144		53,632		106,462		57,183		10,015		631,673
Loss and LAE				53,229		36,183		140,344		15,721		46,924		0		11,613		304,014
Other expense				29,581		13,414		32,025		27,879		39,253		0		31,888		174,040
	Segment expense			82,810		49,597		172,369		43,600		86,177		0		43,501		478,054
		Segment pretax earnings (loss)	$	13,346	$	48,484	$	37,775	$	10,032	$	20,285	$	57,183	$	(33,486)	$	153,619

Three months ended September 30, 2011
Net earned premium			$	85,946	$	104,066	$	191,715	$	51,906	$	99,294	$	0	$	11,329	$	544,256
Other revenue				6,890		109		1,275		254		889		57,439		(588)		66,268
	Segment revenue			92,836		104,175		192,990		52,160		100,183		57,439		10,741		610,524
Loss and LAE				56,355		119,617		138,566		12,664		45,242		0		7,928		380,372
Other expense				26,627		6,023		29,897		27,657		35,734		0		21,422		147,360
	Segment expense			82,982		125,640		168,463		40,321		80,976		-		29,350		527,732
		Segment pretax earnings (loss)	$	9,854	$	(21,465)	$	24,527	$	11,839	$	19,207	$	57,439	$	(18,609)	$	82,792

Catastrophe losses reduced the International segment's pretax earnings by $15.9million and $101.7 million in the first nine monthsof 2012 and 2011, respectively, and $7.6million and $29.4million in the third quarter of 2012 and 2011, respectively. The Professional Liability segment's pretax earnings were reduced by $75.4million in the first nine months and $58.5million in the third quarter of 2011 due to net adverse loss development and an increase in the 2011 accident year loss ratio for the diversified financial products line of business.