Excess and Surplus Lines Segment
We report our U.S.-based E&S lines of business in our Excess and Surplus
Lines segment. We underwrite non-admitted business through our subsidiaries,
James River Insurance and James River Casualty, from offices in Richmond, Virginia;
Scottsdale, Arizona; and Atlanta, Georgia. James River Insurance is our largest
subsidiary as measured by gross written premiums and has been engaged in E&S
insurance for 13 years. James River Insurance has had a consistent record of
underwriting profits since its second year of operation. We added James River
Casualty in 2009 to give us the ability to write E&S risks in Ohio.
E&S lines insurance focuses on insureds that generally cannot purchase insurance
from standard lines insurers typically due to perceived risk related to their
businesses. Our Excess and Surplus Lines segment underwrites property casualty
insurance on an E&S lines basis in all states and the District of Columbia.
Our Excess and Surplus Lines segment distributes its policies through a network
of appointed independent wholesale brokers throughout the United States.
Companies that underwrite on an E&S lines basis operate under a different
regulatory structure than standard market carriers. E&S lines carriers are
generally permitted to craft the terms of the insurance contract to suit the
particular risk they are assuming. Also, E&S lines carriers are, for the
most part, free of rate regulation. In contrast, standard market carriers are
generally required to use approved insurance forms and to charge rates that
have been authorized by or filed with state insurance departments. However,
as E&S carriers, our insurance subsidiaries in the Excess and Surplus Lines
segment are not backed by any state’s guarantee fund, and in most states
these subsidiaries may only write coverage for an insured after they have been
denied coverage by the standard market and signed declarations stating that
the insured is aware that it will not have access to any state guarantee funds
should these subsidiaries be unable to satisfy their obligations.
Our Excess and Surplus Lines segment writes policies for a wide range of businesses
and does not write personal lines insurance. Applications for insurance come
through appointed wholesale brokers who are generally approached by retail agents
after their clients have been rejected by standard markets.
General Casualty writes primary liability coverage on businesses exposed to
premises liability type claims, including: real estate, mercantile and retail
operations, apartments and condominiums, daycare facilities, hotels and motels,
restaurants, bars, taverns and schools. We also write commercial auto coverage
within this division. The head underwriter in this division has 29 years of
experience. We generally write $1.0 million per occurrence in limits, and we
retain the entire $1.0 million limit.
Manufacturers and Contractors writes primary general liability coverage for
a number of classes, including manufacturers of consumer, commercial, and industrial
products and general and trade contractors.
Excess Casualty underwrites excess liability coverage for a variety of risk
classes, including: manufacturers, contractors, distributors and transportation
risks. We typically provide between $1.0 million and $10.0 million per occurrence
limits above a $1.0 million attachment point. Of this amount, we retain up to
$1.0 million of exposure per occurrence and cede the balance to our reinsurers.
We write excess liability coverage above our own primary policies, as well as
policies issued by third parties. When we write above others’ policies,
we are selective regarding underlying carriers, focusing on the nature of the
business, the financial strength of the carrier, their pricing and their claims
handling capabilities. The underwriter who heads this division has 33 years
of industry experience.
Energy writes risks engaged in the business of energy production, distribution
or mining, and the manufacture of equipment used in the energy business segment.
Examples of classes underwritten by this division include oil and gas exploration
companies, oil or gas well drillers, oilfield consultants, oil or gas lease
operators, oil well servicing companies, oil or gas pipeline construction companies,
fireworks manufacturing, mining-related risks, and utility and utility contractors.
We typically provide policy limits between $1.0 million and $5.0 million per
occurrence and retain up to $1.0 million on either a primary or excess basis.
The underwriter leading this division has 44 years of experience in the business.
Specialty Admitted Insurance Segment
The Falls Lake Group comprises our other U.S. insurance segment, Specialty Admitted
Insurance. We established this segment in 2004 to underwrite workers’
compensation insurance for residential contractors in North Carolina. Initially,
we only sought licensure in North Carolina. Later, as our plans for this segment
evolved, we sought and obtained additional licensure. The Falls Lake Group Companies
are currently licensed to underwrite admitted insurance in 48 states and the
District of Columbia. The Falls Lake Group consists of Falls Lake National Insurance
Company (an Ohio domiciled company), Stonewood Insurance Company (a North Carolina
domiciled company), Falls Lake General Insurance Company (an Ohio domiciled
company), and Falls Lake Fire and Casualty Company (a California domiciled company).
Casualty Reinsurance Segment
We report our business of writing insurance for insurance companies in our Casualty
Reinsurance segment. We participate in the reinsurance business through our
Bermuda domiciled reinsurance subsidiary, JRG Re, which is a Class 3B reinsurer.
JRG Re provides proportional and working layer insurance to third parties and
to our U.S.-based insurance subsidiaries.