Segment Information

ProAssurance operates in four segments that are organized around the nature of the products and services provided: Specialty P&C, Workers' Compensation, Lloyd's Syndicate, and Corporate. A description of each segment follows.

Specialty P&C is primarily focused on professional liability insurance and medical technology liability insurance. Professional liability insurance is primarily offered to healthcare providers and institutions and to attorneys and their firms. Medical technology liability insurance is offered for medical technology and life sciences companies that manufacture or distribute products including entities conducting human clinical trials. The Specialty P&C segment cedes certain premium to the Lloyd's Syndicate segment under a quota share agreement with Syndicate 1729. As discussed below, Syndicate 1729 operating results are reported on a quarter delay. For consistency of presentation, the ceded premium associated with the Syndicate 1729 reinsurance agreement has been reported within the Specialty P&C segment on a similar delay.

Workers' Compensation provides workers' compensation products primarily to employers with 1,000 or fewer employees. The segment also offers alternative market solutions whereby policies written are 100% ceded either to a captive insurer unaffiliated with ProAssurance or to SPCs operated by a wholly owned subsidiary of ProAssurance. The SPCs are fully or partially owned by the employer (or employer group, association or affiliate) insured by the policies ceded. Financial results (underwriting profit or loss, plus investment results) of the SPCs accrue to the owners of that cell. Our Workers' Compensation segment is comprised entirely of the business acquired through Eastern on January 1, 2014.

Lloyd's Syndicate includes operating results from ProAssurance's 58% participation in Lloyd's of London Syndicate 1729 that began writing business as of January 1, 2014. Syndicate 1729 underwrites risks over a wide range of property and casualty insurance and reinsurance lines in both the U.S. and international markets. The results of this segment are reported on a quarter delay, except that investment results associated with investment assets solely allocated to Syndicate 1729 operations and certain U.S. paid administrative expenses are reported concurrently as that information is available on an earlier time frame.

Corporate includes ProAssurance's U.S. investment operations, interest expense and U.S. income taxes, all of which are managed at the corporate level, non-premium revenues generated outside of our insurance entities, and corporate expenses.

The accounting policies of the segments are the same as those described in Note 1. ProAssurance evaluates performance of its Specialty P&C and Workers' Compensation segments based on before tax underwriting profit or loss, which excludes investment performance. Performance of the Lloyd's Syndicate segment is evaluated based on underwriting profit or loss, plus investment results of investment assets solely allocated to Syndicate 1729 operations, net of U.K. income tax expense. Performance of the Corporate segment is evaluated based on the contribution made to consolidated after tax results. ProAssurance accounts for inter-segment transactions as if the transactions were to third parties at current market prices. Assets are not allocated to segments because investments and other assets are not managed at the segment level.

Financial data by segment were as follows:



	Year Ended December 31, 2015
(In thousands)	Specialty P&C			Workers' Compensation			Lloyd's Syndicate			Corporate			Inter-segment Eliminations			Consolidated
Net premiums earned	$	443,313		$	213,161		$	37,675		$	—		$	—		$	694,149
Net investment income	—			—			928			107,732			—			108,660
Equity in earnings (loss) of unconsolidated subsidiaries	—			—			—			3,682			—			3,682
Net realized gains (losses)	—			—			24			(41,663		)	—			(41,639		)
Other income	4,561			492			698			2,057			(581		)	7,227
Net losses and loss adjustment expenses (1)	(250,168		)	(140,744		)	(25,181		)	—			5,382			(410,711		)
Underwriting, policy acquisition and operating expenses (2)	(105,574		)	(63,653		)	(18,518		)	(24,518		)	(4,801		)	(217,064		)
Segregated portfolio cells dividend (expense) income	—			(853		)	—			—			—			(853		)
Interest expense	—			—			—			(14,596		)	—			(14,596		)
Income tax benefit (expense)	—			—			(1,240		)	(11,418		)	—			(12,658		)
Segment operating results	$	92,132		$	8,403		$	(5,614	)	$	21,276		$	—		$	116,197
Significant non-cash items:
Depreciation and amortization	$	8,663		$	5,696		$	417		$	21,624		$	—		$	36,400



	Year Ended December 31, 2014
(In thousands)	Specialty P&C			Workers' Compensation			Lloyd's Syndicate			Corporate			Inter-segment Eliminations			Consolidated
Net premiums earned	$	492,733		$	194,540		$	12,458		$	—		$	—		$	699,731
Net investment income	—			—			410			125,147			—			125,557
Equity in earnings (loss) of unconsolidated subsidiaries	—			—			—			3,986			—			3,986
Net realized gains (losses)	—			—			4			14,650			—			14,654
Other income	5,823			645			126			2,285			(481		)	8,398
Gain on acquisition	—			—			—			—			—			—
Net losses and loss adjustment expenses (1)	(228,199		)	(126,447		)	(8,438		)	—			—			(363,084		)
Underwriting, policy acquisition and operating expenses (2)	(133,132		)	(60,357		)	(9,535		)	(8,768		)	481			(211,311		)
Segregated portfolio cells dividend (expense) income	—			(1,842		)	—			—			—			(1,842		)
Interest expense	—			—			—			(14,084		)	—			(14,084		)
Income tax benefit (expense)	—			—			—			(65,440		)	—			(65,440		)
Segment operating results	$	137,225		$	6,539		$	(4,975	)	$	57,776		$	—		$	196,565
Significant non-cash items:
Depreciation and amortization	$	8,945		$	5,828		$	477		$	24,344		$	—		$	39,594



	Year Ended December 31, 2013
(In thousands)	Specialty P&C			Workers' Compensation		Lloyd's Syndicate		Corporate			Inter-segment Eliminations			Consolidated
Net premiums earned	$	527,919		$	—	$	—	$	—		$	—		$	527,919
Net investment income	—			—		—		129,265			—			129,265
Equity in earnings (loss) of unconsolidated subsidiaries	—			—		—		7,539			—			7,539
Net realized gains (losses)	—			—				67,904			—			67,904
Other income	5,648			—		—		1,910			(7		)	7,551
Gain on acquisition	—			—		—		32,314			—			32,314
Net losses and loss adjustment expenses (1)	(224,761		)	—		—		—			—			(224,761		)
Underwriting, policy acquisition and operating expenses (2)	(132,076		)	—		—		(15,748		)	7			(147,817		)
Interest expense	—			—		—		(2,755		)	—			(2,755		)
Loss on extinguishment of debt	—			—		—		—			—			—
Income tax benefit (expense)	—							(99,636		)				(99,636		)
Segment operating results	$	176,730		$	—	$	—	$	120,793		$	—		$	297,523
Significant non-cash items:
Depreciation and amortization	$	7,199		$	—	$	—	$	28,634		$	—		$	35,833
(1) Beginning in 2015, the operating subsidiaries within the Specialty P&C and Workers' Compensation segments were charged a management fee by the Corporate segment for various management services provided to the subsidiary. The portion of the management fee that is allocated to ULAE is eliminated in consolidation.
(2) Under the management fee arrangement mentioned above, such services are reported as expenses of the Corporate segment, and the management fees charged are reported as an offset to Corporate operating expenses. Prior to 2015, a substantial portion of expenses associated with corporate services were directly allocated to the insurance subsidiaries included in the Specialty P&C segment.

The following table provides detailed information regarding ProAssurance's gross premiums earned by product as well as a reconciliation to net premiums earned. All gross premiums earned are from external customers except as noted. ProAssurance's insured risks are primarily within the United States.



	Year Ended December 31
(In thousands)	2015		2014		2013
Specialty P&C Segment
Gross premiums earned:
Healthcare professional liability	$	463,599	$	477,031	$	507,222
Legal professional liability	28,234		28,278		27,162
Medical technology liability	34,838		35,913		33,242
Other	1,447		1,830		1,807
Less: Ceded premiums earned*	84,805		50,319		41,514
Segment net premiums earned	443,313		492,733		527,919

Workers' Compensation Segment
Gross premiums earned:
Traditional business	172,115		160,717		—
Alternative market business	66,168		55,616		—
Less: Ceded premiums earned	25,122		21,793		—
Segment net premiums earned	213,161		194,540		—

Lloyd's Syndicate Segment
Gross premiums earned:
Property and casualty*	43,617		13,429		—
Less: Ceded premiums earned	5,942		971		—
Segment net premiums earned	37,675		12,458		—

Consolidated net premiums earned	$	694,149	$	699,731	$	527,919

* Includes premium ceded from the Specialty P&C segment to the Lloyd's Syndicate segment of $14.4 million and $4.2 million for years ended December 31, 2015 and December 31, 2014, respectively.