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Segments
 12 Months Ended
Dec. 31, 2014
Segments [Abstract]  
Segments

(12) Segments

We report HCC’s results in six operating segments, which includes an Investing segment. Each of our five insurance underwriting segments bears risk for insurance coverage written within its portfolio of insurance products. Each segment generates income from premium written by our underwriting agencies, through third party agents and brokers, or on a direct basis. Fee and commission income earned by our agencies from third party insurance companies is included in segment revenue. Each segment incurs insurance losses, acquisition costs and other administrative expenses related to our insurance companies and underwriting agencies. We monitor and assess each segment’s pretax results based on underwriting profit, gross and net written premium, and its combined ratio, consisting of the net loss ratio and expense ratio.

Included in the portfolio of products for each insurance underwriting segment are the following key products:

• U.S. Property & Casualty – aviation, primary and excess casualty, small account errors and omissions liability (E&O), employment practices liability (EPLI), disability, contingency, public risk, technical and construction property, title and mortgage reinsurance, residual value, and brown water marine written in the United States.

• Professional Liability – directors’ and officers’ (D&O) liability, large account E&O liability, fiduciary liability, fidelity and bankers’ blanket bonds, EPLI, transactional insurance and cyber liability, written in the United States and internationally.

• Accident & Health – medical stop-loss and short-term domestic and international medical coverages written in the United States.

• U.S. Surety & Credit – contract surety bonds, commercial surety bonds and bail bonds written in the United States and credit insurance managed in the United States.

• International – energy, ocean marine, property treaty, surety, credit, liability, property (direct and facultative), accident and health and other smaller product lines written outside the United States.

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: 1) a reclassification of internal claims department costs that are managed as operating expenses in our segments, but reported as loss and loss adjustment expense in our consolidated financial statements, 2) corporate operating expenses not allocated to the segments, 3) interest expense on notes payable, 4) foreign currency expense (benefit) and 5) underwriting results of our Exited Lines. Our Exited Lines include these eight product lines that we no longer write and do not expect to write in the future: 1) accident and health business managed by our underwriting agency, LDG Reinsurance, 2) workers’ compensation, 3) provider excess, 4) Spanish medical malpractice, 5) U.K. motor, 6) film completion bonds, 7) HMO reinsurance and 8) medical excess reinsurance.

The majority of our stock-based compensation expense is included in Corporate & Other. All bonuses are expensed in the respective employee’s segment in the year the bonuses are earned. Any such bonuses that will be paid by restricted stock awards or units, which will be granted by the Compensation Committee in the following year, are reversed within Corporate & Other. The appropriate stock-based compensation expense for these awards will be recorded in Corporate & Other as the awards vest in future years. The majority of our depreciation and amortization expense is included in Corporate & Other.

The following tables present information by business segment.

U.S. PropertyProfessionalAccidentU.S. SuretyCorporate
& CasualtyLiability& Health& CreditInternationalInvesting& OtherConsolidated
Year ended December 31, 2014
Net earned premium$363,998 $351,690 $981,219 $199,764 $426,480 $-$476 $2,323,627
Other revenue20,822 1,082 9,663 2,505 3,711 287,990 3,149 328,922
Segment revenue 384,820 352,772 990,882 202,269 430,191 287,990 3,625 2,652,549
Loss and LAE154,200 206,690 696,288 42,273 196,134 -31,250 1,326,835
Other expense116,553 67,692 155,469 112,232 175,158 -36,774 663,878
Segment expense 270,753 274,382 851,757 154,505 371,292 - 68,024 1,990,713
Segment pretax earnings (loss)$114,067 $78,390 $139,125 $47,764 $58,899 $287,990 $(64,399)$661,836

Year ended December 31, 2013
Net earned premium$367,135 $368,167 $883,515 $194,286 $413,206 $-$12,931 $2,239,240
Other revenue24,266 (7)4,932 1,468 4,334 262,212 459 297,664
Segment revenue 391,401 368,160 888,447 195,754 417,540 262,212 13,390 2,536,904
Loss and LAE175,190 195,429 630,210 24,143 249,199 -48,283 1,322,454
Other expense117,910 66,391 130,814 109,550 158,869 -58,206 641,740
Segment expense 293,100 261,820 761,024 133,693 408,068 - 106,489 1,964,194
Segment pretax earnings (loss)$98,301 $106,340 $127,423 $62,061 $9,472 $262,212 $(93,099)$572,710

Year ended December 31, 2012
Net earned premium$354,050 $394,687 $831,827 $207,955 $412,853 $-$41,253 $2,242,625
Other revenue18,865 731 4,918 843 5,005 252,754 86 283,202
Segment revenue 372,915 395,418 836,745 208,798 417,858 252,754 41,339 2,525,827
Loss and LAE209,286 229,873 601,076 38,535 189,410 -69,894 1,338,074
Other expense116,398 66,721 122,232 113,619 146,807 -67,549 633,326
Segment expense 325,684 296,594 723,308 152,154 336,217 - 137,443 1,971,400
Segment pretax earnings (loss)$47,231 $98,824 $113,437 $56,644 $81,641 $252,754 $(96,104)$554,427

In the above tables, the reconciling amounts for internal claims department costs included in Corporate & Other, which increase loss and LAE and decrease other expense, were $36.4 million in 2014, $32.4 million in 2013 and $32.6 million in 2012.

The following table presents total assets by segment at December 31, 2014 and 2013.

20142013
U.S. Property & Casualty$ 985,871 $ 914,697
Professional Liability 1,104,892 1,110,592
Accident & Health 242,278 235,950
U.S. Surety & Credit 189,054 168,389
International 688,828 859,659
Investing 7,228,608 6,800,313
Corporate & Other 274,815 254,920
Total$ 10,714,346 $ 10,344,520

The tables below present the split of our revenue, pretax earnings and total assets by geographic location. For these disclosures, we determine geographic location by the country of domicile of our subsidiaries that write the business and not by the location of insureds or reinsureds from whom the business was generated.

201420132012
Domestic$ 1,984,992 $ 1,868,557 $ 1,880,954
Foreign 667,557 668,347 644,873
Total revenue$ 2,652,549 $ 2,536,904 $ 2,525,827
Domestic$ 437,774 $ 443,898 $ 364,083
Foreign 224,062 128,812 190,344
Total pretax earnings$ 661,836 $ 572,710 $ 554,427

December 31,
20142013
Domestic$ 7,750,039 $ 7,397,509
Foreign 2,964,307 2,947,011
Total assets$ 10,714,346 $ 10,344,520