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Segment Information
 12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
Segment Information
Segment Information
We classify our business into four reportable segments:
•
Standard Commercial Lines - comprised of insurance products and services provided in the standard marketplace to our commercial customers, who are typically businesses, non-profit organizations, and local government agencies.

•
Standard Personal Lines - comprised of insurance products and services, including flood insurance coverage, provided primarily to individuals acquiring coverage in the standard marketplace.

•
E&S Lines - comprised of insurance products and services provided to customers who have not obtained coverage in the standard marketplace.

•
Investments - invests the premiums collected by our Standard Commercial Lines, Standard Personal Lines, and E&S Lines, as well as amounts generated through our capital management strategies, which may include the issuance of debt and equity securities.

We revised our reporting segments to the above in 2014 because:
•
The revised segments reflect the way we currently manage our business and allocate resources and therefore, our previously-reported segment of "Standard Insurance Operations" is now "Standard Commercial Lines" and "Standard Personal Lines." Historically, we focused our service model predominantly on our distribution partners. We now focus our customer service model on our policyholders, the servicing of which is shared by us and our distribution partners. This change in focus not only heightens awareness of our brand with our distribution partners, but it increases our brand recognition with our policyholders.
•
We implemented changes related to our field model as we realigned the responsibilities of certain management positions and their related field employees. This realignment included redeploying certain field employees to focus solely on Standard Personal Lines marketing, instead of sharing responsibilities between both Standard Personal Lines and Standard Commercial Lines business. Our Agency Management Specialists continue to be a central focus of our field model, with responsibility for managing the growth and profitability of their territories and underwriting new Standard Commercial Lines accounts.
•
We are in the process of implementing organizational changes that realign executive leadership roles over Standard Personal Lines and Standard Commercial Lines.
We remain an account underwriter within Standard Commercial Lines and Standard Personal Lines, as evidenced by the fact that we do not actively market certain mono-line business, such as workers compensation and homeowners coverages.
Our E&S Lines remain a separate segment as their customers and distribution channel have different characteristics than that of our Standard Commercial Lines and Standard Personal Lines. In addition, our Investment segment continues to be managed separately and distinctly from our insurance segments, therefore it continues to meet the definition of a segment for us.
All prior year information contained in this Form 10-K has been restated to reflect our revised segments.

The disaggregated results of our four segments are used by senior management to manage our operations. These segments are evaluated as follows:

•
Standard Commercial Lines, Standard Personal Lines, and our E&S Lines are evaluated based on statutory underwriting results (net premiums earned, incurred losses and loss expenses, policyholders dividends, policy acquisition costs, and other underwriting expenses), and statutory combined ratios; and

•
Our Investments segment is evaluated based on after-tax net investment income and net realized gains and losses.

Our combined insurance segments are subject to certain geographic concentrations, particularly in the Northeast and Mid-Atlantic regions of the country. In 2014, approximately 23% of net premiums written were related to insurance policies written in New Jersey.
 
The goodwill balance of $7.8 million at both December 31, 2014 and 2013 relates to our Standard Commercial Lines reporting unit.
 
In computing the results of each segment, we do not make adjustments for interest expense or net general corporate expenses. While we do not fully allocate taxes to all segments, we do allocate taxes to our investments segment as we manage that segment on after-tax results. We do not maintain separate investment portfolios for the segments and therefore, do not allocate assets to the segments.
 
The following summaries present revenues from continuing operations (net investment income and net realized gains on investments in the case of the Investments segment) and pre-tax income from continuing operations for the individual segments:
Revenue by Segment
 
 
 
 
 
 
Years ended December 31,
 
 
 
 
 
 
($ in thousands)
 
2014
 
2013
 
2012
Standard Commercial Lines:
 
 

 
 

 
 

Net premiums earned:
 
 

 
 

 
 

Commercial automobile
 
$
333,310

 
310,994

 
288,010

Workers compensation
 
274,585

 
267,612

 
262,108

General liability
 
444,938

 
405,322

 
373,381

Commercial property
 
244,792

 
224,412

 
202,340

Businessowners’ policies
 
85,788

 
77,097

 
68,462

Bonds
 
19,288

 
19,000

 
18,891

Other
 
13,011

 
12,182

 
12,143

Miscellaneous income
 
14,747

 
10,253

 
7,003

Total Standard Commercial Lines revenue
 
1,430,459

 
1,326,872

 
1,232,338

Standard Personal Lines:
 
 
 
 
 
 
Net premiums earned:
 
 
 
 
 
 
Personal automobile
 
151,317

 
152,005

 
152,142

Homeowners
 
134,273

 
127,991

 
113,850

Other
 
11,157

 
14,336

 
13,563

Miscellaneous income
 
1,834

 
1,948

 
1,824

Total Standard Personal Lines revenue
 
298,581

 
296,280

 
281,379

E&S Lines:
 
 
 
 
 
 
Net premiums earned:
 
 
 
 
 
 
General liability
 
96,142

 
88,761

 
59,721

Commercial property
 
38,572

 
32,054

 
17,698

Commercial automobile
 
5,436

 
4,306

 
1,810

Miscellaneous income
 
17

 
—

 
—

Total E&S Lines revenue
 
140,167

 
125,121

 
79,229

Investments:
 
 

 
 

 
 

Net investment income
 
138,708

 
134,643

 
131,877

Net realized investment gains
 
26,599

 
20,732

 
8,988

Total investment revenues
 
165,307

 
155,375

 
140,865

Total all segments
 
2,034,514

 
1,903,648

 
1,733,811

Other income
 
347

 
93

 
291

Total revenues from continuing operations
 
$
2,034,861

 
1,903,741

 
1,734,102



Income from Continuing Operations before Federal Income Tax
 
 
 
 
 
 
Years ended December 31,
 
 
 
 
 
 
($ in thousands)
 
2014
 
2013
 
2012
Standard Commercial Lines:
 
 

 
 

 
 

Underwriting gain (loss), before federal income tax
 
$
61,221

 
33,856

 
(40,935
)
GAAP combined ratio
 
95.7
%
 
97.4

 
103.3

Statutory combined ratio
 
95.5
%
 
97.1

 
103.0

 
 
 
 
 
 
 
Standard Personal Lines:
 
 
 
 
 
 
Underwriting gain (loss), before federal income tax
 
16,536

 
8,645

 
(3,514
)
GAAP combined ratio
 
94.4
%
 
97.1
%
 
101.3
%
Statutory combined ratio
 
94.5
%
 
96.9
%
 
100.7
%
 
 
 
 
 
 
 
E&S Lines:
 
 
 
 
 
 
Underwriting gain (loss), before federal income tax
 
386

 
(3,735
)
 
(19,558
)
GAAP combined ratio
 
99.7
%
 
103.0

 
124.7

Statutory combined ratio
 
99.2
%
 
102.9

 
118.8

 
 
 
 
 
 
 
Investments:
 
 

 
 

 
 

Net investment income
 
138,708

 
134,643

 
131,877

Net realized investment gains
 
26,599

 
20,732

 
8,988

Total investment income, before federal income tax
 
165,307

 
155,375

 
140,865

Tax on investment income
 
43,811

 
40,489

 
34,758

Total investment income, after federal income tax
 
$
121,496

 
114,886

 
106,107


 
Reconciliation of Segment Results to Income from Continuing Operations, before Federal Income Tax
 
 
 
 
 
 
Years ended December 31,
 
 
 
 
 
 
($ in thousands)
 
2014
 
2013
 
2012
Underwriting gain (loss), before federal income tax
 
 
 
 
 
 
     Standard Commercial Lines
 
$
61,221

 
33,856

 
(40,935
)
     Standard Personal Lines
 
16,536

 
8,645

 
(3,514
)
     E&S Lines
 
386

 
(3,735
)
 
(19,558
)
Investment income, before federal income tax
 
165,307

 
155,375

 
140,865

Total all segments
 
243,450

 
194,141

 
76,858

Interest expense
 
(22,086
)
 
(22,538
)
 
(18,872
)
General corporate and other expenses
 
(24,233
)
 
(27,801
)
 
(20,351
)
Income from continuing operations, before federal income tax
 
$
197,131

 
143,802

 
37,635