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Segment reporting | 9 Months Ended | 12 Months Ended
--- | --- | ---
Sep. 30, 2014 | Dec. 31, 2013
Segment Reporting [Abstract] |  |
Segment reporting | Segment reporting The determination of the Company’s business segments is based on the manner in which management monitors the performance of its operations. The Company reports two operating segments - Property and Casualty Reinsurance and Catastrophe Risk Management. The Company has also identified a corporate function that includes net investment income on capital and certain general and administrative expenses related to corporate activities. Effective January 1, 2014, the Company modified the presentation of its operating segments to allocate net investment income from float to the property and casualty reinsurance segment. The property and casualty reinsurance operations generate excess cash flows, or float, which the Company tracks in managing the business. The Company considers net investment income on float in evaluating the overall contribution of the property and casualty reinsurance segment. Prior period segment results have been adjusted to conform to this presentation. The following is a summary of the Company’s operating segments results for the three and nine months ended September 30, 2014 and 2013:
| Three months ended September 30, 2014
| Property and Casualty Reinsurance (6) |  | Catastrophe Risk Management |  | Corporate |  | Total
Revenues | ($ in thousands)
Gross premiums written | $ | 124,931 |  |  | $ | 1,472 |  |  | $ | — |  |  | $ | 126,403 |
Gross premiums ceded | (150 | ) |  | — |  |  | — |  |  | (150 | )
Net premiums written | 124,781 |  |  | 1,472 |  |  | — |  |  | 126,253 |
Change in net unearned premium reserves | (23,294 | ) |  | 5,989 |  |  | — |  |  | (17,305 | )
Net premiums earned | 101,487 |  |  | 7,461 |  |  | — |  |  | 108,948 |
Expenses |  |  |  |  |  |  |
Loss and loss adjustment expenses incurred, net | 60,121 |  |  | (6 | ) |  | — |  |  | 60,115 |
Acquisition costs, net | 37,571 |  |  | 746 |  |  | — |  |  | 38,317 |
General and administrative expenses | 5,556 |  |  | 648 |  |  | 3,920 |  |  | 10,124 |
Total expenses | 103,248 |  |  | 1,388 |  |  | 3,920 |  |  | 108,556 |
Net underwriting loss | (1,761 | ) |  | n/a |  | n/a |  | n/a
Net investment income (loss) | (137 | ) |  | 881 |  |  | 808 |  |  | 1,552 |
Other expenses | (2,982 | ) |  | — |  |  | — |  |  | (2,982 | )
Income tax expense | — |  |  | — |  |  | (1,542 | ) |  | (1,542 | )
Segment income (loss) including non-controlling interests | (4,880 | ) |  | 6,954 |  |  | (4,654 | ) |  | (2,580 | )
Segment income attributable to non-controlling interests | — |  |  | (3,325 | ) |  | (92 | ) |  | (3,417 | )
Segment income (loss) | $ | (4,880 | ) |  | $ | 3,629 |  |  | $ | (4,746 | ) |  | $ | (5,997 | )
Property and Casualty Reinsurance - Underwriting Ratios: |  |  |  |  |  |
Loss ratio (1) | 59.2 | % |  |  |  |  |  |
Acquisition cost ratio (2) | 37.0 | % |  |  |  |  |  |
Composite ratio (3) | 96.2 | % |  |  |  |  |  |
General and administrative expense ratio (4) | 5.5 | % |  |  |  |  |  |
Combined ratio (5) | 101.7 | % |  |  |  |  |  |
(1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.
(2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.
(3) | Composite ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net and acquisition costs, net by net premiums earned.
(4) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned.
(5) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned.
(6) | Effective January 1, 2014, the Company modified the presentation of its operating segments to allocate net investment income from float to the Property and Casualty Reinsurance segment. Prior period segment results have been adjusted to conform to this presentation.
| Three Months Ended September 30, 2013
| Property and Casualty Reinsurance (6) |  | Catastrophe Risk Management |  | Corporate |  | Total
Revenues | ($ in thousands)
Gross premiums written | $ | 43,714 |  |  | $ | 1,711 |  |  | $ | — |  |  | $ | 45,425 |
Gross premiums ceded | — |  |  | — |  |  | — |  |  | — |
Net premiums written | 43,714 |  |  | 1,711 |  |  | — |  |  | 45,425 |
Change in net unearned premium reserves | 18,051 |  |  | 2,853 |  |  | — |  |  | 20,904 |
Net premiums earned | 61,765 |  |  | 4,564 |  |  | — |  |  | 66,329 |
Expenses |  |  |  |  |  |  |
Loss and loss adjustment expenses incurred, net | 39,349 |  |  | — |  |  | — |  |  | 39,349 |
Acquisition costs, net | 20,541 |  |  | 576 |  |  | — |  |  | 21,117 |
General and administrative expenses | 6,739 |  |  | 949 |  |  | 2,158 |  |  | 9,846 |
Total expenses | 66,629 |  |  | 1,525 |  |  | 2,158 |  |  | 70,312 |
Net underwriting loss | (4,864 | ) |  | n/a |  | n/a |  | n/a
Net investment income | 7,072 |  |  | 2,089 |  |  | 45,456 |  |  | 54,617 |
Other expenses | (1,246 | ) |  | — |  |  | — |  |  | (1,246 | )
Segment income including non-controlling interests | 962 |  |  | 5,128 |  |  | 43,298 |  |  | 49,388 |
Segment income attributable to non-controlling interests | — |  |  | (2,432 | ) |  | (386 | ) |  | (2,818 | )
Segment income | $ | 962 |  |  | $ | 2,696 |  |  | $ | 42,912 |  |  | $ | 46,570 |
Property and Casualty Reinsurance - Underwriting Ratios: |  |  |  |  |  |
Loss ratio (1) | 63.7 | % |  |  |  |  |  |
Acquisition cost ratio (2) | 33.3 | % |  |  |  |  |  |
Composite ratio (3) | 97.0 | % |  |  |  |  |  |
General and administrative expense ratio (4) | 10.9 | % |  |  |  |  |  |
Combined ratio (5) | 107.9 | % |  |  |  |  |  |
(1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.
(2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.
(3) | Composite ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net and acquisition costs, net by net premiums earned.
(4) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned.
(5) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned.
(6) | Effective January 1, 2014, the Company modified the presentation of its operating segments to allocate net investment income from float to the Property and Casualty Reinsurance segment. Prior period segment results have been adjusted to conform to this presentation.
| Nine months ended September 30, 2014
| Property and Casualty Reinsurance (6) |  | Catastrophe Risk Management |  | Corporate |  | Total
Revenues | ($ in thousands)
Gross premiums written | $ | 347,495 |  |  | $ | 12,003 |  |  | $ | — |  |  | $ | 359,498 |
Gross premiums ceded | (150 | ) |  | — |  |  | — |  |  | (150 | )
Net premiums written | 347,345 |  |  | 12,003 |  |  | — |  |  | 359,348 |
Change in net unearned premium reserves | (96,069 | ) |  | (2,319 | ) |  | — |  |  | (98,388 | )
Net premiums earned | 251,276 |  |  | 9,684 |  |  | — |  |  | 260,960 |
Expenses |  |  |  |  |  |  |
Loss and loss adjustment expenses incurred, net | 150,789 |  |  | (6 | ) |  | — |  |  | 150,783 |
Acquisition costs, net | 92,477 |  |  | 854 |  |  | — |  |  | 93,331 |
General and administrative expenses | 17,020 |  |  | 2,160 |  |  | 10,518 |  |  | 29,698 |
Total expenses | 260,286 |  |  | 3,008 |  |  | 10,518 |  |  | 273,812 |
Net underwriting loss | (9,010 | ) |  | n/a |  | n/a |  | n/a
Net investment income | 13,458 |  |  | 943 |  |  | 77,671 |  |  | 92,072 |
Other expenses | (4,789 | ) |  | — |  |  | — |  |  | (4,789 | )
Income tax expense | — |  |  | — |  |  | (3,917 | ) |  | (3,917 | )
Segment income (loss) including non-controlling interests | (341 | ) |  | 7,619 |  |  | 63,236 |  |  | 70,514 |
Segment income attributable to non-controlling interests | — |  |  | (3,854 | ) |  | (1,586 | ) |  | (5,440 | )
Segment income (loss) | $ | (341 | ) |  | $ | 3,765 |  |  | $ | 61,650 |  |  | $ | 65,074 |
Property and Casualty Reinsurance - Underwriting Ratios: |  |  |  |  |  |
Loss ratio (1) | 60.0 | % |  |  |  |  |  |
Acquisition cost ratio (2) | 36.8 | % |  |  |  |  |  |
Composite ratio (3) | 96.8 | % |  |  |  |  |  |
General and administrative expense ratio (4) | 6.8 | % |  |  |  |  |  |
Combined ratio (5) | 103.6 | % |  |  |  |  |  |
(1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.
(2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.
(3) | Composite ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net and acquisition costs, net by net premiums earned.
(4) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned.
(5) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned.
(6) | Effective January 1, 2014, the Company modified the presentation of its operating segments to allocate net investment income from float to the Property and Casualty Reinsurance segment. Prior period segment results have been adjusted to conform to this presentation.
| Nine months ended September 30, 2013
| Property and Casualty Reinsurance (6) |  | Catastrophe Risk Management |  | Corporate |  | Total
Revenues | ($ in thousands)
Gross premiums written | $ | 231,229 |  |  | $ | 8,431 |  |  | $ | — |  |  | $ | 239,660 |
Gross premiums ceded | (9,975 | ) |  | — |  |  | — |  |  | (9,975 | )
Net premiums written | 221,254 |  |  | 8,431 |  |  | — |  |  | 229,685 |
Change in net unearned premium reserves | (65,408 | ) |  | (2,120 | ) |  | — |  |  | (67,528 | )
Net premiums earned | 155,846 |  |  | 6,311 |  |  | — |  |  | 162,157 |
Expenses |  |  |  |  |  |  |
Loss and loss adjustment expenses incurred, net | 103,291 |  |  | 388 |  |  | — |  |  | 103,679 |
Acquisition costs, net | 48,353 |  |  | 758 |  |  | — |  |  | 49,111 |
General and administrative expenses | 16,265 |  |  | 2,721 |  |  | 5,085 |  |  | 24,071 |
Total expenses | 167,909 |  |  | 3,867 |  |  | 5,085 |  |  | 176,861 |
Net underwriting loss | (12,063 | ) |  | n/a |  | n/a |  | n/a
Net investment income | 15,128 |  |  | 3,210 |  |  | 150,466 |  |  | 168,804 |
Other expenses | (2,675 | ) |  | — |  |  | — |  |  | (2,675 | )
Segment income including non-controlling interests | 390 |  |  | 5,654 |  |  | 145,381 |  |  | 151,425 |
Segment income attributable to non-controlling interests | — |  |  | (3,027 | ) |  | (1,175 | ) |  | (4,202 | )
Segment income | $ | 390 |  |  | $ | 2,627 |  |  | $ | 144,206 |  |  | $ | 147,223 |
Property and Casualty Reinsurance - Underwriting Ratios: |  |  |  |  |  |
Loss ratio (1) | 66.3 | % |  |  |  |  |  |
Acquisition cost ratio (2) | 31.0 | % |  |  |  |  |  |
Composite ratio (3) | 97.3 | % |  |  |  |  |  |
General and administrative expense ratio (4) | 10.4 | % |  |  |  |  |  |
Combined ratio (5) | 107.7 | % |  |  |  |  |  |
(1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.
(2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.
(3) | Composite ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net and acquisition costs, net by net premiums earned.
(4) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned.
(5) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned.
(6) | Effective January 1, 2014, the Company modified the presentation of its operating segments to allocate net investment income from float to the Property and Casualty Reinsurance segment. Prior period segment results have been adjusted to conform to this presentation.
For the three months ended September 30, 2014, three contracts each contributed greater than 10.0% of total gross premiums written. These three contracts contributed 60.5%, 31.8% and 14.1%, respectively, of total gross premiums written for the three months ended September 30, 2014. For the three months ended September 30, 2013, four contracts each contributed greater than 10% of total gross premiums written. These four contracts contributed 61.0%, 22.0%, 13.1% and 12.3%, respectively, of total gross premiums written for the three months ended September 30, 2013. For the nine months ended September 30, 2014, three contracts each contributed greater than 10.0% of total gross premiums written. These three contracts contributed 29.2%, 12.4% and 11.2%, respectively, of total gross premiums written for the nine months ended September 30, 2014. For the nine months ended September 30, 2013, four contracts contributed greater than 10% of total gross premiums written. These four contracts contributed 18.8%, 14.6%, 11.6% and 11.5%, respectively, of total gross premiums written for the nine months ended September 30, 2013. The following table provides a breakdown of the Company’s gross premiums written by line of business for the three and nine months ended September 30, 2014 and 2013:
| For the three months ended
| September 30, 2014 |  | September 30, 2013
| ($ in thousands)
Property | $ | (2,810 | ) |  | (2.2 | )% |  | $ | (1,603 | ) |  | (3.5 | )%
Casualty | 128,469 |  |  | 101.6 | % |  | 9,426 |  |  | 20.7 | %
Specialty | (728 | ) |  | (0.6 | )% |  | 35,891 |  |  | 79.0 | %
Total property and casualty reinsurance | 124,931 |  |  | 98.8 | % |  | 43,714 |  |  | 96.2 | %
Catastrophe risk management | 1,472 |  |  | 1.2 | % |  | 1,711 |  |  | 3.8 | %
| $ | 126,403 |  |  | 100.0 | % |  | $ | 45,425 |  |  | 100.0 | %
| For the nine months ended
| September 30, 2014 |  | September 30, 2013
| ($ in thousands)
Property | $ | 78,577 |  |  | 21.9 | % |  | $ | 26,635 |  |  | 11.1 | %
Casualty | 244,235 |  |  | 67.9 | % |  | 111,021 |  |  | 46.4 | %
Specialty | 24,683 |  |  | 6.9 | % |  | 93,573 |  |  | 39.0 | %
Total property and casualty reinsurance | 347,495 |  |  | 96.7 | % |  | 231,229 |  |  | 96.5 | %
Catastrophe risk management | 12,003 |  |  | 3.3 | % |  | 8,431 |  |  | 3.5 | %
| $ | 359,498 |  |  | 100.0 | % |  | $ | 239,660 |  |  | 100.0 | %
The following table provides a breakdown of the Company’s gross premiums written by prospective and retroactive reinsurance contracts for the three and nine months ended September 30, 2014 and 2013:
| For the three months ended |  | For the nine months ended
| September 30, 2014 |  | September 30, 2013 |  | September 30, 2014 |  | September 30, 2013
| ($ in thousands)
Prospective | $ | 126,403 |  |  | 100.0 | % |  | $ | 27,981 |  |  | 61.6 | % |  | $ | 356,822 |  |  | 99.3 | % |  | $ | 199,916 |  |  | 83.4 | %
Retroactive | — |  |  | — | % |  | 17,444 |  |  | 38.4 | % |  | 2,676 |  |  | 0.7 | % |  | 39,744 |  |  | 16.6 | %
| $ | 126,403 |  |  | 100.0 | % |  | $ | 45,425 |  |  | 100.0 | % |  | $ | 359,498 |  |  | 100.0 | % |  | $ | 239,660 |  |  | 100.0 | %
The Company records the gross premium written and earned at the inception of the contract for retroactive reinsurance contracts. Substantially all of the Company's business is sourced through reinsurance brokers. The following table provides a breakdown of the Company's gross premiums written from brokers for the nine months ended September 30, 2014 and 2013:
| 2014 |  | 2013
| ($ in thousands)
Guy Carpenter & Company, LLC | $ | 91,567 |  |  | 25.5 | % |  | $ | (11,927 | ) |  | (5.0 | )%
Willis Re | 55,589 |  |  | 15.5 | % |  | 13,421 |  |  | 5.6 | %
Aon Benfield - a division of Aon plc | 54,072 |  |  | 15.0 | % |  | 91,349 |  |  | 38.2 | %
Advocate Reinsurance Partners, LLC | 51,002 |  |  | 14.2 | % |  | 26,000 |  |  | 10.8 | %
Stonehill Reinsurance Partners, LLC | 44,744 |  |  | 12.4 | % |  | — |  |  | — | %
TigerRisk Partners LLC | 13,852 |  |  | 3.9 | % |  | 10,472 |  |  | 4.4 | %
BMS Intermediaries | — |  |  | — | % |  | 46,095 |  |  | 19.2 | %
Other brokers | 3,203 |  |  | 0.9 | % |  | 7,545 |  |  | 3.1 | %
Total broker placed | 314,029 |  |  | 87.4 | % |  | 182,955 |  |  | 76.3 | %
Direct placements | 45,469 |  |  | 12.6 | % |  | 56,705 |  |  | 23.7 | %
| $ | 359,498 |  |  | 100.0 | % |  | $ | 239,660 |  |  | 100.0 | %
The following table provides a breakdown of the Company’s gross premiums written by domicile of the ceding companies for the three and nine months September 30, 2014 and 2013:
| For the three months ended |  | For the nine months ended
| September 30, 2014 |  | September 30, 2013 |  | September 30, 2014 |  | September 30, 2013
| ($ in thousands)
United States | $ | 85,686 |  |  | 67.7 | % |  | $ | 7,665 |  |  | 16.9 | % |  | $ | 288,420 |  |  | 80.3 | % |  | $ | 151,314 |  |  | 63.1 | %
United Kingdom | (812 | ) |  | (0.6 | )% |  | — |  |  | — | % |  | 24,600 |  |  | 6.8 | % |  | — |  |  | — | %
Bermuda | 41,529 |  |  | 32.9 | % |  | 37,760 |  |  | 83.1 | % |  | 46,478 |  |  | 12.9 | % |  | 86,946 |  |  | 36.3 | %
Other | — |  |  | — | % |  | — |  |  | — | % |  | — |  |  | — | % |  | 1,400 |  |  | 0.6 | %
| $ | 126,403 |  |  | 100.0 | % |  | $ | 45,425 |  |  | 100.0 | % |  | $ | 359,498 |  |  | 100.0 | % |  | $ | 239,660 |  |  | 100.0 | %
| Segment reporting The determination of the Company’s business segments is based on the manner in which management monitors the performance of its operations. The Company reports two operating segments – Property and Casualty Reinsurance and Catastrophe Risk Management. The Company has also identified a corporate function that includes the Company’s investment results and certain general and administrative expenses related to corporate activities. The following is a summary of the Company’s operating segments results for the years ended December 31, 2013 and 2012:
| Year Ended December 31, 2013
| Property and Casualty Reinsurance |  | Catastrophe Risk Management |  | Corporate |  | Total
Revenues | ($ in thousands)
Gross premiums written | $ | 393,588 |  |  | $ | 8,349 |  |  | $ | — |  |  | $ | 401,937 |
Gross premiums ceded | (9,975 | ) |  | — |  |  | — |  |  | (9,975 | )
Net premiums written | 383,613 |  |  | 8,349 |  |  | — |  |  | 391,962 |
Change in net unearned premium reserves | (171,006 | ) |  | (289 | ) |  | — |  |  | (171,295 | )
Net premiums earned | 212,607 |  |  | 8,060 |  |  | — |  |  | 220,667 |
Net investment income | — |  |  | 4,421 |  |  | 248,782 |  |  | 253,203 |
Total revenues | 212,607 |  |  | 12,481 |  |  | 248,782 |  |  | 473,870 |
Expenses |  |  |  |  |  |  |
Loss and loss adjustment expenses incurred, net | 139,616 |  |  | 196 |  |  | — |  |  | 139,812 |
Acquisition costs, net | 66,981 |  |  | 963 |  |  | — |  |  | 67,944 |
General and administrative expenses | 21,838 |  |  | 3,852 |  |  | 7,346 |  |  | 33,036 |
Total expenses | 228,435 |  |  | 5,011 |  |  | 7,346 |  |  | 240,792 |
Underwriting loss | (15,828 | ) |  | n/a |  |  | n/a |  |  | n/a |
Income including non-controlling interests | n/a |  |  | 7,470 |  |  | 241,436 |  |  | 233,078 |
Income attributable to non-controlling interests | n/a |  |  | (4,046 | ) |  | (1,721 | ) |  | (5,767 | )
Net income (loss) | $ | (15,828 | ) |  | $ | 3,424 |  |  | $ | 239,715 |  |  | $ | 227,311 |
Property and Casualty Reinsurance - Underwriting Ratios: |  |  |  |  |  |
Loss ratio (1) | 65.7 | % |  |  |  |  |  |
Acquisition cost ratio (2) | 31.5 | % |  |  |  |  |  |
General and administrative expense ratio (3) | 10.3 | % |  |  |  |  |  |
Combined ratio (4) | 107.5 | % |  |  |  |  |  |
(1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.
(2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.
(3) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned.
(4) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned.
| Year Ended December 31, 2012
| Property and Casualty Reinsurance |  | Catastrophe Risk Management |  | Corporate |  | Total
Revenues | ($ in thousands)
Gross premiums written | $ | 190,374 |  |  | $ | — |  |  | $ | — |  |  | $ | 190,374 |
Gross premiums ceded | — |  |  | — |  |  | — |  |  | — |
Net premiums written | 190,374 |  |  | — |  |  | — |  |  | 190,374 |
Change in net unearned premium reserves | (93,893 | ) |  | — |  |  | — |  |  | (93,893 | )
Net premiums earned | 96,481 |  |  | — |  |  | — |  |  | 96,481 |
Net investment income | — |  |  | — |  |  | 136,422 |  |  | 136,422 |
Total revenues | 96,481 |  |  | — |  |  | 136,422 |  |  | 232,903 |
Expenses |  |  |  |  |  |  |
Loss and loss adjustment expenses incurred, net | 80,306 |  |  | — |  |  | — |  |  | 80,306 |
Acquisition costs, net | 24,604 |  |  | — |  |  | — |  |  | 24,604 |
General and administrative expenses | 20,290 |  |  | 1,534 |  |  | 5,552 |  |  | 27,376 |
Total expenses | 125,200 |  |  | 1,534 |  |  | 5,552 |  |  | 132,286 |
Underwriting loss | (28,719 | ) |  | n/a |  |  | n/a |  |  | n/a |
Income (loss) including non-controlling interests | n/a |  |  | (1,534 | ) |  | 130,870 |  |  | 100,617 |
Income attributable to non-controlling interests | n/a |  |  | — |  |  | (1,216 | ) |  | (1,216 | )
Net income (loss) | $ | (28,719 | ) |  | $ | (1,534 | ) |  | $ | 129,654 |  |  | $ | 99,401 |
Property and Casualty Reinsurance - Underwriting Ratios: |  |  |  |  |  |
Loss ratio (1) | 83.2 | % |  |  |  |  |  |
Acquisition cost ratio (2) | 25.5 | % |  |  |  |  |  |
General and administrative expense ratio (3) | 21.0 | % |  |  |  |  |  |
Combined ratio (4) | 129.7 | % |  |  |  |  |  |
(1) | Loss ratio is calculated by dividing loss and loss adjustment expenses incurred, net by net premiums earned.
(2) | Acquisition cost ratio is calculated by dividing acquisition costs, net by net premiums earned.
(3) | General and administrative expense ratio is calculated by dividing general and administrative expenses related to underwriting activities by net premiums earned.
(4) | Combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, net, acquisition costs, net and general and administrative expenses related to underwriting activities by net premiums earned.
For the year ended December 31, 2013, three contracts individually contributed greater than 10% of total gross premiums written. These three contracts individually contributed 14.9%, 11.2% and 10.5%, respectively, of total gross premiums written for the year ended December 31, 2013. For the year ended December 31, 2012, three contracts each contributed greater than 10% of total gross premiums written. These three contracts contributed 22.3%, 20.0% and 11.8%, respectively, of total gross premiums written for the year ended December 31, 2012. The following table provides a breakdown of the Company’s gross premiums written by line of business for the years ended December 31, 2013 and 2012:
| 2013 |  | 2012
| ($ in thousands)
Property | $ | 67,612 |  |  | 16.8 | % |  | $ | 103,174 |  |  | 54.2 | %
Casualty | 210,017 |  |  | 52.2 | % |  | 44,700 |  |  | 23.5 | %
Specialty | 115,959 |  |  | 28.9 | % |  | 42,500 |  |  | 22.3 | %
Total property and casualty reinsurance | 393,588 |  |  | 97.9 | % |  | 190,374 |  |  | 100.0 | %
Catastrophe risk management | 8,349 |  |  | 2.1 | % |  | — |  |  | — | %
| $ | 401,937 |  |  | 100.0 | % |  | $ | 190,374 |  |  | 100.0 | %
The following table provides a breakdown of the Company’s gross premiums written by prospective and retroactive reinsurance contracts for the years ended December 31, 2013 and 2012:
| 2013 |  | 2012
| ($ in thousands)
Prospective | $ | 362,151 |  |  | 90.1 | % |  | $ | 190,374 |  |  | 100.0 | %
Retroactive | 39,786 |  |  | 9.9 | % |  | — |  |  | — | %
| $ | 401,937 |  |  | 100.0 | % |  | $ | 190,374 |  |  | 100.0 | %
The Company records the gross premium written and earned at the inception of the contract for retroactive reinsurance contracts. Substantially all of the Company’s business is sourced through reinsurance brokers. The following table provides a breakdown of the Company’s gross premiums written from brokers for the years ended December 31, 2013 and 2012:
| 2013 |  | 2012
| ($ in thousands)
Aon Benfield - a division of Aon plc | $ | 111,865 |  |  | 27.8 | % |  | $ | 22,000 |  |  | 11.6 | %
Guy Carpenter & Company, LLC | 89,125 |  |  | 22.2 | % |  | 65,073 |  |  | 34.2 | %
Advocate Reinsurance Partners, LLC | 57,994 |  |  | 14.4 | % |  | 22,473 |  |  | 11.8 | %
BMS Intermediaries | 46,095 |  |  | 11.5 | % |  | 5,269 |  |  | 2.8 | %
Other brokers | 40,246 |  |  | 10.0 | % |  | 33,059 |  |  | 17.4 | %
Total broker placed | 345,325 |  |  | 85.9 | % |  | 147,874 |  |  | 77.8 | %
Other | 56,612 |  |  | 14.1 | % |  | 42,500 |  |  | 22.2 | %
| $ | 401,937 |  |  | 100.0 | % |  | $ | 190,374 |  |  | 100.0 | %
The following table provides a breakdown of the Company’s gross premiums written by domicile of the ceding companies for the years ended December 31, 2013 and 2012 :
| 2013 |  | 2012
| ($ in thousands)
United States | $ | 304,141 |  |  | 75.7 | % |  | $ | 190,374 |  |  | 100.0 | %
Bermuda | 96,396 |  |  | 24.0 | % |  | — |  |  | — | %
Other | 1,400 |  |  | 0.3 | % |  | — |  |  | — | %
| $ | 401,937 |  |  | 100.0 | % |  | $ | 190,374 |  |  | 100.0 | %

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