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Segments
 3 Months Ended
Mar. 31, 2015
Segments [Abstract]  
Segments

(3) Segments

In the first quarter of 2015, following the acquisition of ProAg, HCC’s executive management changed the structure under which it manages and evaluates the results of our numerous product lines. We now report our results in four operating segments, consisting of three insurance underwriting segments: 1) North America Property & Casualty, 2) Accident & Health and 3) International, and the Investing segment.

Each of our three 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, claims management costs and other administrative expenses related to our insurance companies and underwriting agencies. Internal claims department costs are managed and reported as a component of loss and loss adjustment expense. 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 segment’s net loss ratio and expense ratio.

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

• North America Property & Casualty – directors' and officers' liability (D&O), primary and excess casualty, small account errors and omissions liability, employment practices liability, agriculture, aviation, sports and entertainment, public risk, surety, and various smaller products.

• Accident & Health – medical stop-loss, short-term domestic and international medical, and travel.

• International – marine and energy, property treaty, property (direct and facultative), accident and health, D&O, professional indemnity, casualty, surety, and credit.

The North America Property & Casualty segment includes the former U.S. Property & Casualty segment, the U.S. portion of the former Professional Liability segment, the Surety portion of the former U.S. Surety & Credit segment and ProAg’s agriculture business. The International segment includes the former International segment, the International portion of the former Professional Liability segment, and the Credit portion of the former U.S. Surety & Credit segment. The Accident & Health and Investing segments are unchanged from the prior presentation. All prior period information has been recast to present our segment disclosures and information on a comparable basis with our new segment reporting structure.

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) corporate operating expenses not allocated to the segments, 2) interest expense on notes payable, 3) foreign currency expense (benefit) and 4) 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.

The following tables present information by business segment.

North America PropertyAccidentCorporate
& Casualty& HealthInternationalInvesting& OtherConsolidated
Three months ended March 31, 2015
Net earned premium$209,239$254,950$136,377$-$(3)$600,563
Other revenue6,1022,0131,00866,6689675,887
Segment revenue215,341256,963137,38566,66893676,450
Loss and LAE116,436187,01161,443-272365,162
Other expense68,34838,66547,311-6,136160,460
Segment expense184,784225,676108,754-6,408525,622
Segment pretax earnings (loss)$30,557$31,287$28,631$66,668$(6,315)$150,828

Three months ended March 31, 2014
Net earned premium$201,334$232,143$128,844$-$291$562,612
Other revenue5,4311,64097677,0521,21986,318
Segment revenue206,765233,783129,82077,0521,510648,930
Loss and LAE103,553170,80556,314-74330,746
Other expense57,53834,57346,475-24,626163,212
Segment expense161,091205,378102,789-24,700493,958
Segment pretax earnings (loss)$45,674$28,405$27,031$77,052$(23,190)$154,972

In conjunction with the resegmentation, we reassigned the goodwill associated with the lines of business in our former Professional Liability and U.S. Surety & Credit reporting units at December 31, 2014 to the applicable North America Property & Casualty and International reporting units. We allocated goodwill to the lines of business within the former reporting units based on the relative fair value of each line of business to the sum of the former reporting unit’s total fair value at December 31, 2014. We noted no indicators of impairment as of December 31, 2014, after allocation of goodwill.

The goodwill balances by reportable segment, after allocation of the goodwill in our former reporting units, are presented below. We noted no indicators of impairment in our goodwill as of March 31, 2015.

North America PropertyAccident
& Casualty& HealthInternationalTotal
Balance at beginning of year$552,006$144,113$209,517$905,636
Acquisition of ProAg45,000--45,000
Other, principally foreign exchange100-(1,385)(1,285)
Balance at March 31, 2015$597,106$144,113$208,132$949,351

The table below presents total assets by segment following our resegmentation.

March 31,December 31,
20152014
North America Property & Casualty$2,232,696$1,894,756
Accident & Health244,394242,278
International1,092,6401,073,889
Investing7,178,0887,228,608
Corporate & Other278,479274,815
Total$11,026,297$10,714,346