| Operating Segment Information |
6. OPERATING SEGMENT INFORMATION The Company’s chief operating decision maker (CODM) is the chief executive officer. The Company’s CODM assesses the segments’ performance by using earnings before income taxes (underwriting income) and the combined ratio. Underwriting income and combined ratio are analyzed at the segment level and influence how resources are allocated. Decisions are made based on what is likely to provide the best long-term return to the Company. Amortization of deferred acquisition costs represents the recognition of commission and premium taxes over the life of insurance polices, in proportion to premium revenue recognized. The other policy acquisition costs line item includes other expenses associated with underwriting, but that cannot be specifically associated with the successful acquisition of a policy, including, but not limited to, employment costs for underwriters and underwriting support as well as costs for policy acquisition systems. Insurance operating expenses reflect allocated costs from various support departments, such as corporate technology, accounting, human resources and facilities, among others. Net investment income consists of the interest and dividend income streams from our investments in fixed income and equity securities. Interest expense represents the cost of debt and lines of credit. General corporate expenses include director and shareholder relation costs and other compensation-related expenses incurred for the benefit of the corporation, but not attributable to the operations of our insurance segments. Investee earnings primarily represents our 23 percent share in earnings of Prime Holdings Insurance Services, Inc., a privately held insurance company which specializes in hard-to-place risks. Assets, and the revenues and expenses associated with investing and financing activities, are not managed at the segment level and therefore are not allocated to segments. All segment revenues are from external customers and all long-lived assets are held domestically. We have no material foreign operations or customer concentrations and have no intersegment revenues. The following table summarizes revenues by major product type within each operating segment: | | | | | | | | | | | | | | | For the Three Months | | For the Six Months | Net Premiums Earned | | Ended June 30, | | Ended June 30, | (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | Casualty | | | | | | | | | | | | | Commercial excess and personal umbrella | | $ | 108,911 | | $ | 85,986 | | $ | 212,120 | | $ | 166,021 | Commercial transportation | | | 30,015 | | | 29,323 | | | 60,274 | | | 56,624 | General liability | | | 27,589 | | | 26,104 | | | 54,307 | | | 51,516 | Professional services | | | 26,623 | | | 26,000 | | | 53,210 | | | 51,085 | Small commercial | | | 20,000 | | | 19,459 | | | 39,915 | | | 37,796 | Executive products | | | 5,521 | | | 5,448 | | | 11,464 | | | 11,363 | Other casualty | | | 15,979 | | | 16,780 | | | 32,396 | | | 32,971 | Total | | $ | 234,638 | | $ | 209,100 | | $ | 463,686 | | $ | 407,376 | Property | | | | | | | | | | | | | Commercial property | | $ | 76,876 | | $ | 87,400 | | $ | 159,688 | | $ | 175,005 | Marine | | | 41,017 | | | 37,069 | | | 78,726 | | | 69,637 | Other property | | | 12,771 | | | 9,628 | | | 24,794 | | | 18,866 | Total | | $ | 130,664 | | $ | 134,097 | | $ | 263,208 | | $ | 263,508 | Surety | | | | | | | | | | | | | Transactional | | $ | 13,096 | | $ | 12,308 | | $ | 25,756 | | $ | 24,416 | Commercial | | | 12,422 | | | 12,700 | | | 25,198 | | | 23,325 | Contract | | | 11,084 | | | 10,860 | | | 22,401 | | | 21,116 | Total | | $ | 36,602 | | $ | 35,868 | | $ | 73,355 | | $ | 68,857 | Grand Total | | $ | 401,904 | | $ | 379,065 | | $ | 800,249 | | $ | 739,741 |
The following tables present our operating results by segment, as evaluated by the CODM. | | | | | | | | | | | | | For the Three Months Ended June 30, 2025 | | | | | | | | | | | | | | (in thousands) | | | Casualty | | | Property | | | Surety | | | Total | Revenue | | | | | | | | | | | | | Net premiums earned | | $ | 234,638 | | $ | 130,664 | | $ | 36,602 | | $ | 401,904 | Net investment income | | | - | | | - | | | - | | | 39,418 | Net realized gains (losses) | | | - | | | - | | | - | | | 15,004 | Net unrealized gains on equity securities | | | - | | | - | | | - | | | 43,500 | Consolidated revenue | | $ | 234,638 | | $ | 130,664 | | $ | 36,602 | | $ | 499,826 | | | | | | | | | | | | | | Less: Expenses | | | | | | | | | | | | | Losses and settlement expenses | | $ | 141,260 | | $ | 38,459 | | $ | 4,859 | | | | Amortization of deferred acquisition costs | | | 45,761 | | | 26,698 | | | 12,656 | | | | Other policy acquisition costs | | | 22,067 | | | 7,320 | | | 11,000 | | | | Insurance operating expenses | | | 17,261 | | | 8,676 | | | 3,657 | | | | Segment earnings before income taxes | | $ | 8,289 | | $ | 49,511 | | $ | 4,430 | | $ | 62,230 | | | | | | | | | | | | | | Depreciation and amortization expense | | $ | 1,544 | | $ | 521 | | $ | 359 | | | |
| | | | | | | | | | | | | For the Three Months Ended June 30, 2024 | | | | | | | | | | | | | | (in thousands) | | | Casualty | | | Property | | | Surety | | | Total | Revenue | | | | | | | | | | | | | Net premiums earned | | $ | 209,100 | | $ | 134,097 | | $ | 35,868 | | $ | 379,065 | Net investment income | | | - | | | - | | | - | | | 33,961 | Net realized gains (losses) | | | - | | | - | | | - | | | (192) | Net unrealized gains on equity securities | | | - | | | - | | | - | | | 3,608 | Consolidated revenue | | $ | 209,100 | | $ | 134,097 | | $ | 35,868 | | $ | 416,442 | | | | | | | | | | | | | | Less: Expenses | | | | | | | | | | | | | Losses and settlement expenses | | $ | 121,850 | | $ | 41,382 | | $ | 4,567 | | | | Amortization of deferred acquisition costs | | | 39,904 | | | 27,046 | | | 11,827 | | | | Other policy acquisition costs | | | 21,256 | | | 4,227 | | | 9,661 | | | | Insurance operating expenses | | | 15,775 | | | 8,262 | | | 3,284 | | | | Segment earnings before income taxes | | $ | 10,315 | | $ | 53,180 | | $ | 6,529 | | $ | 70,024 | | | | | | | | | | | | | | Depreciation and amortization expense | | $ | 1,391 | | $ | 469 | | $ | 253 | | | |
| | | | | | | | | | | | | For the Six Months Ended June 30, 2025 | | | | | | | | | | | | | | (in thousands) | | | Casualty | | | Property | | | Surety | | | Total | Revenue | | | | | | | | | | | | | Net premiums earned | | $ | 463,686 | | $ | 263,208 | | $ | 73,355 | | $ | 800,249 | Net investment income | | | - | | | - | | | - | | | 76,144 | Net realized gains (losses) | | | - | | | - | | | - | | | 29,916 | Net unrealized gains on equity securities | | | - | | | - | | | - | | | 1,182 | Consolidated revenue | | $ | 463,686 | | $ | 263,208 | | $ | 73,355 | | $ | 907,491 | | | | | | | | | | | | | | Less: Expenses | | | | | | | | | | | | | Losses and settlement expenses | | $ | 287,095 | | $ | 71,184 | | $ | 3,537 | | | | Amortization of deferred acquisition costs | | | 88,664 | | | 53,674 | | | 25,258 | | | | Other policy acquisition costs | | | 44,736 | | | 15,277 | | | 21,580 | | | | Insurance operating expenses | | | 32,831 | | | 16,647 | | | 6,990 | | | | Segment earnings before income taxes | | $ | 10,360 | | $ | 106,426 | | $ | 15,990 | | $ | 132,776 | | | | | | | | | | | | | | Depreciation and amortization expense | | $ | 3,049 | | $ | 1,019 | | $ | 669 | | | |
| | | | | | | | | | | | | For the Six Months Ended June 30, 2024 | | | | | | | | | | | | | | (in thousands) | | | Casualty | | | Property | | | Surety | | | Total | Revenue | | | | | | | | | | | | | Net premiums earned | | $ | 407,376 | | $ | 263,508 | | $ | 68,857 | | $ | 739,741 | Net investment income | | | - | | | - | | | - | | | 66,808 | Net realized gains (losses) | | | - | | | - | | | - | | | 5,802 | Net unrealized gains on equity securities | | | - | | | - | | | - | | | 48,922 | Consolidated revenue | | $ | 407,376 | | $ | 263,508 | | $ | 68,857 | | $ | 861,273 | | | | | | | | | | | | | | Less: Expenses | | | | | | | | | | | | | Losses and settlement expenses | | $ | 231,322 | | $ | 73,959 | | $ | 6,342 | | | | Amortization of deferred acquisition costs | | | 76,739 | | | 53,265 | | | 23,103 | | | | Other policy acquisition costs | | | 42,855 | | | 8,642 | | | 19,771 | | | | Insurance operating expenses | | | 32,471 | | | 16,746 | | | 6,807 | | | | Segment earnings before income taxes | | $ | 23,989 | | $ | 110,896 | | $ | 12,834 | | $ | 147,719 | | | | | | | | | | | | | | Depreciation and amortization expense | | $ | 2,800 | | $ | 921 | | $ | 512 | | | |
The following table reconciles segment earnings before income taxes to earnings before income taxes. | | | | | | | | | | | | | | | For the Three Months | | For the Six Months | | | Ended June 30, | | Ended June 30, | (in thousands) | | 2025 | | 2024 | | 2025 | | 2024 | Reconciliation of earnings before income taxes | | | | | | | | | | | | | Segment earnings before income taxes | | $ | 62,230 | | $ | 70,024 | | $ | 132,776 | | $ | 147,719 | Net investment income | | | 39,418 | | | 33,961 | | | 76,144 | | | 66,808 | Net realized gains (losses) | | | 15,004 | | | (192) | | | 29,916 | | | 5,802 | Net unrealized gains on equity securities | | | 43,500 | | | 3,608 | | | 1,182 | | | 48,922 | Interest expense on debt | | | (1,350) | | | (1,604) | | | (2,685) | | | (3,222) | General corporate expenses | | | (4,754) | | | (4,140) | | | (7,702) | | | (9,150) | Equity in earnings of unconsolidated investees | | | 2,467 | | | 1,646 | | | 5,515 | | | 6,415 | Earnings before income taxes | | $ | 156,515 | | $ | 103,303 | | $ | 235,146 | | $ | 263,294 |
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