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02/26/18

National General Holdings Corp. Reports Fourth Quarter 2017 Results

NEW YORK, Feb. 26, 2018 (GLOBE NEWSWIRE) -- National General Holdings Corp. (Nasdaq:NGHC) today reported a fourth quarter 2017 net loss of $9.9 million or $0.09 per diluted share, compared to net income of $39.2 million or $0.36 per diluted share in the fourth quarter of 2016. Fourth quarter 2017 operating earnings(1) was $30.0 million or $0.28 per diluted share, compared to $32.8 million or $0.30 per diluted share in the fourth quarter of 2016. Fourth quarter net income included a one-time non-cash tax charge of $25.8 million from the revaluation of the Company’s deferred tax asset related to the recently implemented reduction to the U.S. corporate tax rate.

Fourth Quarter 2017 Highlights Versus Fourth Quarter 2016*

  • Gross written premium grew $246.9 million or 30.1% to $1,067.2 million, driven by added premiums from organic growth and the acquisition of Direct General and within our P&C business of 30.9% and continued growth of our A&H segment of 26.3%.
  • The overall combined ratio(10,14) was 96.9% compared to 96.4% in the prior year’s quarter, excluding non-cash amortization of intangible assets and impairment of goodwill. The P&C segment reported an increase in combined ratio to 98.2% from 97.9% in the prior year’s quarter, due to $52.9 million of losses, or 7.5 P&C loss ratio points, from California fires in the fourth quarter 2017. Excluding the aforementioned fire-related losses, the P&C segment combined ratio(16) was 90.7% and NGHC overall combined ratio(16) was 90.6%. The A&H segment reported a combined ratio of 89.9% compared to 86.7% in the prior year’s quarter.
  • Total revenue grew by $50.2 million or 5.1% to $1.0 billion, primarily driven by the aforementioned premium growth, service and fee income growth of $37.5 million or 34.6%, and an increase in ceding commission income of $14.2 million, primarily related to the new quota share agreements announced in the third quarter.
  • Shareholders’ equity was $1.93 billion and fully diluted book value per share was $13.86 at December 31, 2017, growth of 2.3% and 3.0%, respectively, from December 31, 2016. Our trailing twelve month operating return on average equity (ROE)(15) was 7.9% as of December 31, 2017.
  • Fourth quarter 2017 operating earnings exclude the following material items, net of tax: $1.8 million or $0.02 per share of net gain on investments, $6.1 million or $0.06 per share of non-cash amortization of intangible assets, $4.9 million or $0.05 per share of impairment of goodwill related to our Luxembourg subsidiary, and losses of $4.9 million or $0.05 per share from earnings of equity method investments. Operating earnings also excluded a charge of $25.8 million or $0.24 per share from the deferred tax asset impairment.
  • Prior period results referred to in this release are reported on an “as adjusted” basis. For details on the adjustments, please refer to page 3 of this release and Note 3 to our Annual Report on Form 10-K for the year ended December 31, 2017.

Barry Karfunkel, National General’s President and CEO, stated: “This quarter concluded one of the most active domestic catastrophe years in recent memory.  While National General’s results did not escape their impact, we continue to report profitable underwriting results and our losses were less than our market share in the impacted areas, demonstrating the disciplined underwriting standards that we operate with. In addition, I’m proud of how our claims team responded and it’s in times like this that we feel fortunate to be able to stand behind our promise and commitment to customers that we’ll take care of them in their greatest time of need.  Alternative asset classes continued to be deemphasized in our investment portfolio through the sale of a portion of our life settlement holdings in the quarter.

I am excited about what’s in store for 2018 and beyond.  We have built one of the most sophisticated and dynamic personal lines platforms in the industry, which we believe will drive National General’s success for years to come.”

*NOTE: Unless specified otherwise, discussion of our fourth quarter 2017 and 2016 results do not include financial results from the Reciprocal Exchanges, which are presented within our consolidated financial results within this release but are not included in net income available to NGHC common stockholders.

Overview of Fourth Quarter 2017 as Compared to Fourth Quarter 2016

Gross written premium grew 30.1% to $1,067.2 million, net written premium increased by 7.8% to $799.8 million and net earned premium grew 3.0% to $843.0 million. Premium growth was driven by several key factors: underlying organic growth within our P&C segment, continued growth of our A&H segment, and additional premiums from the acquisition of Direct General.

Service and fee income grew 34.6% to $146.1 million, driven by organic growth and added service and fee income from our recent completed transactions.

Excluding non-cash amortization of intangible assets and impairment of goodwill, the combined ratio(10,14,15) was 96.9% with a loss ratio of 74.2% and an expense ratio(10,13,15) of 22.7%, compared to a prior year combined ratio of 96.4% with a loss ratio of 71.7% and an expense ratio of 24.7%. The expense ratio benefited from the ceding commission related to the new quota shares.

Underwriting results detailed by each of our business segments are as follows:

  • Property & Casualty - Gross written premium grew by 30.7% to $930.0 million, net written premium increased by 4.5% to $674.1 million and net earned premium decreased by 0.4% to $709.3 million. P&C gross written premium growth was driven by several key factors: organic growth of 30.9%, and $37.3 million from the Direct General acquisition. Service and fee income grew 20.9% to $99.3 million, driven by increased premium volume in the quarter and the addition of service and fee income from Direct General. Excluding non-cash amortization of intangible assets, the combined ratio(10,14) was 98.2% with a loss ratio of 76.9% and an expense ratio(10,13) of 21.3%, versus a prior year combined ratio of 97.9% with a loss ratio of 72.8% and an expense ratio of 25.1%. The loss ratio was impacted by pre-tax catastrophe losses of approximately $52.9 million related to California fires in the fourth quarter 2017. Excluding the aforementioned losses, the P&C segment combined ratio(16) was 90.7% in the quarter. The expense ratio also benefited from the ceding commission related to the new quota shares.
     
  • Accident & Health - Gross written premium grew to $137.2 million, net written premium grew to $125.7 million, and net earned premium grew to $133.8 million, from $108.6 million, $97.1 million, and $106.6 million, respectively, in the prior year’s quarter. The A&H gross written premium increase was driven by the continued growth across the entire book. Service and fee income was $46.8 million compared to $26.5 million in the prior year’s quarter. The increase in service and fee income primarily relates to the mix of business sold in the quarter compared with the year-ago quarter. Excluding non-cash amortization of intangible assets, the combined ratio(10,14) was 89.9% with a loss ratio of 59.9% and an expense ratio(10,13,15) of 30.0%, versus a prior year combined ratio of 86.7% with a loss ratio of 64.5% and an expense ratio of 22.2%.
     
  • Reciprocal Exchanges - Results for the Reciprocal Exchanges are not included in net income available to NGHC common stockholders. Gross written premium was $98.0 million, net written premium was $39.2 million, and net earned premium was $46.6 million. Reciprocal Exchanges combined ratio(10,14,15) excluding non-cash amortization of intangible assets was 105.6% with a loss ratio of 66.7% and an expense ratio(10,13) of 38.9%.

Investment income grew 28.1% to $28.2 million, reflecting an increase in the size of our investment portfolio as compared to the prior year’s quarter. Fourth quarter 2017 results included $2.8 million of net investment gains compared to a gain of $10.3 million in the fourth quarter of 2016. Total investments and cash and cash equivalents were $3.7 billion as of December 31, 2017. Accumulated other comprehensive income decreased to a $8.1 million loss at December 31, 2017 from $11.5 million income at December 31, 2016.

Interest expense was $12.5 million, up from $11.6 million in the prior year’s quarter. Debt was $713.7 million at December 31, 2017, down from $752.0 million at December 31, 2016.

Earnings of equity investments (predominantly our investment in Life Settlement Entities and alternative investments) was a $7.5 million loss in the fourth quarter of 2017 versus a $6.0 million gain in the prior year’s quarter. In the quarter, substantially all of the remaining life settlement contracts held by entities in which we held a 50% interest were sold to a vehicle owned and managed by an independent third party, in which we will now hold a 15% ownership interest.

The fourth quarter of 2017 provision for income taxes was $24.8 million and the effective tax rate for the quarter was 81.9% compared with income taxes of $4.4 million and an effective tax rate of 9.6% in the fourth quarter of 2016. The revaluation of our deferred tax asset increased income taxes by $25.8 million in the quarter.

Shareholders’ equity was $1,928.6 million at December 31, 2017, growth of 2.3% from $1,885.7 million at December 31, 2016. Fully diluted book value per share was $13.86 at December 31, 2017, growth of 3.0% from $13.45 at December 31, 2016. Our trailing twelve month operating return on average equity (ROE)(15) was 7.9% as of December 31, 2017.

As further explained in Note 3 to our Annual Report on Form 10-K for the year ended December 31, 2017, management identified certain errors in the previously issued consolidated financial statements for fiscal years 2016 and 2015, as well as the first three quarters of fiscal year 2017. The primary driver of the correction relates to the retrospective reclassification of costs associated with claims handling from General and Administrative Expense to Loss Adjustment Expense and the timing of recording losses relating to the company’s limited partnership interests in certain real estate joint ventures which was initially recorded in the second quarter of 2017. National General has concluded that the errors were not material to the consolidated financial position, results of operations or cash flows as presented in the Company’s previously filed quarterly and annual financial statements. As a result, amendment of such reports is not required. Please refer to Note 3 in our 10-K for the year ended December 31, 2017 for further detail on the adjustments.

 
Year-to-Date P&C Segment Notable Large Losses
2017 Quarter     P&C Notable
Large Losses and
LAE 
($ millions)
  P&C Loss Ratio Points*   EPS Impact After Tax
Q4 California Fires - December   $10.4   1.5 %   $0.06
Q4 California Fires - October   $42.5   6.0 %   $0.25
Q3 Hurricane Maria   $5.0   0.7 %   $0.03
Q3 Hurricane Irma   $25.1   3.7 %   $0.15
Q3 Hurricane Harvey   $22.3   3.2 %   $0.13
Q2 Hail event   $7.0   0.9 %   $0.04
Q2 Increased Loss Estimate from Q1 West Coast Storms   $9.1   1.1 %   $0.05
Q1 West Coast Storms   $8.9   1.2 %   $0.05

* Loss ratio points related to P&C net earned premium in quarter the loss event was recorded.

Conference Call

On Tuesday, February 27, 2018 at 9:00 AM ET, President and Chief Executive Officer Barry Karfunkel and Chief Financial Officer Mike Weiner will review results and discuss business conditions via a conference call that may be accessed as follows:

Toll-Free U.S. Dial-in: 800-346-7359
International Dial-in: 973-528-0008
Conference Entry Code: 234458
Webcast Registration: http://ir.nationalgeneral.com/events-and-presentations 

A replay of the conference call will be accessible from 2:00 PM ET on Tuesday, February 27, 2018 to 11:59 PM ET on Tuesday, March 13, 2018 by dialing either 800-332-6854 (toll-free) within the U.S. or 973-528-0005 outside the U.S. and entering passcode 234458. In addition, a replay of the webcast can also be retrieved at http://ir.nationalgeneral.com/events-and-presentations.

About National General Holdings Corp.

National General Holdings Corp., headquartered in New York City, is a specialty personal lines insurance holding company. National General traces its roots to 1939, has a financial strength rating of A- (excellent) from A.M. Best, and provides personal and commercial automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, supplemental health and other niche insurance products.

Forward Looking Statements

This news release contains “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as “may,” “will,” “plan,” “expect,” “project,” “intend,” “estimate,” “anticipate” and “believe” or their variations or similar terminology. There can be no assurance that actual developments will be those anticipated by the Company. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, non-receipt of expected payments from insureds or reinsurers, changes in interest rates, a downgrade in the financial strength ratings of our insurance subsidiaries, the effect of the performance of financial markets on our investment portfolio, our ability to accurately underwrite and price our products and to maintain and establish accurate loss reserves, estimates of the fair value of investments, development of claims and the effect on loss reserves, large loss activity including hurricanes and wildfires, the cost and availability of reinsurance coverage, the effects of emerging claim and coverage issues, changes in the demand for our products, our degree of success in integrating acquired businesses, the effect of general economic conditions, state and federal legislation, the effects of tax reform, regulations and regulatory investigations into industry practices, risks associated with conducting business outside the United States, developments relating to existing agreements, disruptions to our business relationships with AmTrust Financial Services, Inc., ACP Re Holdings, LLC, or third party agencies, breaches in data security or other disruptions involving our technology, heightened competition, changes in pricing environments, and changes in asset valuations. The forward-looking statements contained in this news release are made only as of the date of this release. The Company undertakes no obligation to publicly update any forward-looking statement except as may be required by law. Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those projected is contained in the Company’s filings with the Securities and Exchange Commission.


Income Statement - Fourth Quarter
$ in thousands
(Unaudited)

    Three Months Ended December 31,  
    2017     2016  
    NGHC   Reciprocal
Exchanges
  Consolidated     NGHC   Reciprocal
Exchanges
  Consolidated  
Revenues:                 (As adjusted)   (As adjusted)   (As adjusted)  
Gross written premium   $ 1,067,188     $ 97,994     $ 1,164,382   (A)   $ 820,279     $ 83,392     $ 902,960   (H)
Net written premium   799,816     39,172     838,988       742,145     42,352     784,497    
Net earned premium   843,034     46,605     889,639       818,823     38,860     857,683    
                             
Ceding commission income   19,229     5,623     24,852       5,042     16,152     21,194    
Service and fee income   146,098     (1,864 )   129,283   (B)   108,562     1,307     98,194   (I)
Net investment income   28,152     2,105     27,762   (C)   21,977     3,063     22,712   (J)
Net gain (loss) on investments   2,755     (10 )   2,745       10,322     278     10,600    
Other income                 24,308         24,308    
Total revenues   $ 1,039,268     $ 52,459     $ 1,074,281   (D)   $ 989,034     $ 59,660     $ 1,034,691   (K)
                             
Expenses:                            
Loss and loss adjustment expense   $ 625,862     $ 31,064     $ 656,926       $ 587,020     $ 25,655     $ 612,675    
Acquisition costs and other underwriting expenses   142,005     3,324     145,329       126,071     8,972     135,043    
General and administrative expenses   228,601     18,540     232,190   (E)   218,867     23,579     230,771   (L)
Interest expense   12,496     2,495     12,496   (F)   11,645     2,328     11,645   (M)
Total expenses   $ 1,008,964     $ 55,423     $ 1,046,941   (G)   $ 943,603     $ 60,534     $ 990,134   (N)
                             
Income (loss) before provision (benefit) for income taxes and earnings (losses) of equity method investments   $ 30,304     $ (2,964 )   $ 27,340       $ 45,431     $ (874 )   $ 44,557    
Provision (benefit) for income taxes   24,822     (4,300 )   20,522       4,351     (9,232 )   (4,881 )  
Income before earnings (losses) of equity method investments   5,482     1,336     6,818       41,080     8,358     49,438    
Earnings (losses) of equity method investments (related parties)   (7,537 )       (7,537 )     6,010         6,010    
Net income (loss) before non-controlling interest and dividends on preferred shares   (2,055 )   1,336     (719 )     47,090     8,358     55,448    
Less: net income attributable to non-controlling interest       1,336     1,336       61     8,358     8,419    
Net income (loss) before dividends on preferred shares   (2,055 )       (2,055 )     47,029         47,029    
Less: dividends on preferred shares   7,875         7,875       7,875         7,875    
Net income (loss) available to common stockholders   $ (9,930 )   $     $ (9,930 )     $ 39,154     $     $ 39,154    

NOTES:Consolidated column includes eliminations as follows: (A) $(800), (B) $(14,951), (C) $(2,495), (D) $(17,446), (E) $(14,951), (F) $(2,495), (G) $(17,446), (H) $(711), (I) $(11,675), (J) $(2,328), (K) $(14,003), (L) $(11,675), (M) $(2,328) and (N) $(14,003).

Income Statement - Year to Date
$ in thousands
(Audited)

    Twelve Months Ended December 31,  
    2017     2016 (1)  
    NGHC   Reciprocal
Exchanges
  Consolidated     NGHC   Reciprocal
Exchanges
  Consolidated  
Revenues:                 (As adjusted)   (As adjusted)   (As adjusted)  
Gross written premium   $ 4,375,414     $ 383,773     $ 4,755,985   (A)   $ 3,261,670     $ 241,540     $ 3,500,898   (H)
Net written premium   3,401,946     175,649     3,577,595       2,952,148     120,548     3,072,696    
Net earned premium   3,484,305     169,871     3,654,176       2,884,776     110,395     2,995,171    
                             
Ceding commission income   56,276     60,180     116,456       2,078     43,522     45,600    
Service and fee income   552,580     5,794     502,927   (B)   410,771     3,862     380,817   (I)
Net investment income   111,024     9,325     110,745   (C)   97,376     8,716     99,586   (J)
Net gain on investments   40,665     6,123     46,788       29,491     515     30,006    
Other-than-temporary impairment loss   (25 )       (25 )     (22,102 )       (22,102 )  
Other income (expense)   (198 )       (198 )     24,308         24,308    
Total revenues   $ 4,244,627     $ 251,293     $ 4,430,869   (D)   $ 3,426,698     $ 167,010     $ 3,553,386   (K)
                             
Expenses:                            
Loss and loss adjustment expense   $ 2,506,242     $ 119,840     $ 2,626,082       $ 2,023,064     $ 69,216     $ 2,092,280    
Acquisition costs and other underwriting expenses   622,269     50,160     672,429       481,865     15,148     497,007   (L)
General and administrative expenses   887,472     80,971     912,996   (E)   677,582     65,376     709,148   (M)
Interest expense   47,086     9,604     47,086   (F)   40,180     6,506     40,180   (N)
Total expenses   $ 4,063,069     $ 260,575     $ 4,258,593   (G)   $ 3,222,691     $ 156,246     $ 3,338,615   (O)
                             
Income (loss) before provision (benefit) for income taxes and earnings (losses) of equity method investments   $ 181,558     $ (9,282 )   $ 172,276       $ 204,007     $ 10,764     $ 214,771    
Provision (benefit) for income taxes   66,918     (5,645 )   61,273       43,789     (9,791 )   33,998    
Income (loss) before earnings (losses) of equity method investments   114,640     (3,637 )   111,003       160,218     20,555     180,773    
Earnings (losses) of equity method investments (related parties)   (8,795 )       (8,795 )     15,601         15,601    
Net income (loss) before non-controlling interest and dividends on preferred shares   105,845     (3,637 )   102,208       175,819     20,555     196,374    
Less: net income (loss) attributable to non-controlling interest       (3,637 )   (3,637 )     113     20,555     20,668    
Net income before dividends on preferred shares   105,845         105,845       175,706         175,706    
Less: dividends on preferred shares   31,500         31,500       24,333         24,333    
Net income available to common stockholders   $ 74,345     $     $ 74,345       $ 151,373     $     $ 151,373    

NOTES:Consolidated column includes eliminations as follows: (A) $(3,202), (B) $(55,447), (C) $(9,604), (D) $(65,051), (E) $(55,447), (F) $(9,604), (G) $(65,051), (H) $(2,312), (I) $(33,816), (J) $(6,506), (K) $(40,322), (L) $(6), (M) $(33,810), (N) $(6,506) and (O) $(40,322).

(1) The Reciprocal Exchanges did not meet the criteria for consolidation under GAAP for the Three Months Ended March 31, 2016.

Earnings and Per Share Data
$ in thousands, except shares and per share data
(Unaudited)

    Three Months Ended
December 31,
  Twelve Months Ended
December 31,
    2017   2016   2017   2016
        (As adjusted)       (As adjusted)
Net income (loss) available to common stockholders   $ (9,930 )   $ 39,154     $ 74,345     $ 151,373  
Basic net income (loss) per common share   $ (0.09 )   $ 0.37     $ 0.70     $ 1.43  
Diluted net income (loss) per common share   $ (0.09 )   $ 0.36     $ 0.68     $ 1.40  
                 
Operating earnings attributable to NGHC(1)   $ 29,974     $ 32,768     $ 118,065     $ 155,466  
Basic operating earnings per common share(1)   $ 0.28     $ 0.31     $ 1.11     $ 1.47  
Diluted operating earnings per common share(1)   $ 0.28     $ 0.30     $ 1.09     $ 1.44  
                 
Dividends declared per common share   $ 0.04     $ 0.04     $ 0.16     $ 0.14  
                 
Weighted average number of basic shares outstanding   106,682,586     106,395,429     106,588,402     105,951,752  
Weighted average number of diluted shares outstanding   108,793,184     108,973,892     108,752,262     108,278,318  
Shares outstanding, end of period   106,697,648     106,428,092          
Fully diluted shares outstanding, end of period   108,808,246     109,006,555          
Book value per share   $ 14.14     $ 13.77          
Fully diluted book value per share   $ 13.86     $ 13.45          
                         


Reconciliation of Net Income to Operating Earnings (Non-GAAP)

$ in thousands, except per share data
(Unaudited)

    Three Months Ended
December 31,
  Twelve Months Ended
December 31,
    2017   2016   2017   2016
        (As adjusted)       (As adjusted)
Net income (loss) available to common stockholders   $ (9,930 )   $ 39,154     $ 74,345     $ 151,373  
Add (subtract):                
Net (gain) on investments   (2,755 )   (10,322 )   (40,665 )   (29,491 )
Other-than-temporary impairment losses           25     22,102  
Other (income) expense       (24,308 )   198     (24,308 )
Equity in (earnings) losses of equity method investments   7,537     (6,010 )   8,795     (15,601 )
Non-cash impairment of goodwill (non-deductible)   4,884     3,552     4,884     3,552  
Non-cash amortization of intangible assets   9,428     25,351     51,729     48,130  
Income tax at 35%   (4,973 )   5,351     (7,029 )   (291 )
Deferred asset tax impairment   25,783         25,783      
Operating earnings attributable to NGHC (1)   $ 29,974     $ 32,768     $ 118,065     $ 155,466  
                 
Operating earnings per common share:                
Basic operating earnings per common share   $ 0.28     $ 0.31     $ 1.11     $ 1.47  
Diluted operating earnings per common share   $ 0.28     $ 0.30     $ 1.09     $ 1.44  
                                 


Balance Sheet

$ in thousands
(Audited)

    December 31, 2017     December 31, 2016  
ASSETS   NGHC  
Reciprocal
Exchanges
  Consolidated     NGHC   Reciprocal
Exchanges
  Consolidated  
                  (As adjusted)   (As adjusted)   (As adjusted)  
Total investments (2)   $ 3,411,730     $ 327,213     $ 3,649,788   (A)   $ 3,413,727     $ 306,345     $ 3,631,064   (J)
Cash and cash equivalents   286,840     5,442     292,282       212,894     7,405     220,299    
Premiums and other receivables, net   1,268,330     56,792     1,324,321   (B)   1,045,377     47,198     1,091,774   (K)
Reinsurance recoverable (3)   1,199,961     94,204     1,294,165       892,264     55,972     948,236    
Intangible assets, net   400,385     3,685     404,070       456,695     11,025     467,720    
Goodwill   174,153         174,153       158,364         158,364    
Other (4)   1,186,056     130,763     1,300,964   (C)   652,932     89,764     720,571   (L)
Total assets   $ 7,927,455     $ 618,099     $ 8,439,743   (D)   $ 6,832,253     $ 517,709     $ 7,238,028   (M)
LIABILITIES AND STOCKHOLDERS’ EQUITY                            
Liabilities:                            
Unpaid loss and loss adjustment expense reserves   $ 2,520,204     $ 143,353     $ 2,663,557       $ 2,136,791     $ 137,075     $ 2,273,866    
Unearned premiums and other revenue   1,807,210     225,395     2,032,605       1,502,562     198,724     1,701,286    
Reinsurance payable (5)   329,772     69,076     398,047   (E)   78,949     20,662     98,810   (N)
Accounts payable and accrued expenses (6)   423,054     24,682     431,881   (F)   331,129     13,179     337,910   (O)
Debt   713,710     89,155     713,710   (G)   752,001     89,008     752,001   (P)
Other   204,936     41,582     246,518       145,138     27,386     156,797   (Q)
Total liabilities   $ 5,998,886     $ 593,243     $ 6,486,318   (H)   $ 4,946,570     $ 486,034     $ 5,320,670   (R)
Stockholders’ equity:                            
Common stock (7)   $ 1,067     $     $ 1,067       $ 1,064     $     $ 1,064    
Preferred stock (8)   420,000         420,000       420,000         420,000    
Additional paid-in capital   917,751         917,751       913,787         913,787    
Accumulated other comprehensive income (loss)   (8,112 )       (8,112 )     11,475         11,475    
Retained earnings   597,863         597,863       539,114         539,114    
Total National General Holdings Corp. stockholders’ equity   1,928,569         1,928,569       1,885,440         1,885,440    
Non-controlling interest       24,856     24,856       243     31,675     31,918    
Total stockholders’ equity   $ 1,928,569     $ 24,856     $ 1,953,425       $ 1,885,683     $ 31,675     $ 1,917,358    
Total liabilities and stockholders’ equity   $ 7,927,455     $ 618,099     $ 8,439,743   (I)   $ 6,832,253     $ 517,709     $ 7,238,028   (S)

NOTES:Consolidated column includes eliminations as follows: (A) $(89,155), (B) $(801), (C) $(15,855), (D) $(105,811), (E) $(801), (F) $(15,855), (G) $(89,155), (H) $(105,811), (I) $(105,811), (J) $(89,008), (K) $(801), (L) $(22,125), (M) $(111,934), (N) $(801), (O) $(6,398), (P) $(89,008), (Q) $(15,727), (R) $(111,934) and (S) $(111,934).

Segment Information - Fourth Quarter
$ in thousands
(Unaudited)

    Three Months Ended December 31,      
    2017     2016
    P&C   A&H   NGHC     Reciprocal
Exchanges
    P&C   A&H   NGHC     Reciprocal
Exchanges
                        (As adjusted)   (As adjusted)   (As adjusted)     (As adjusted)
Gross written premium   $ 929,981     $ 137,207     $ 1,067,188       $ 97,994       $ 711,641     $ 108,638     $ 820,279       $ 83,392  
Net written premium   674,080     125,736     799,816       39,172       645,042     97,103     742,145       42,352  
Net earned premium   709,256     133,778     843,034       46,605       712,260     106,563     818,823       38,860  
                                       
Ceding commission income   19,000     229     19,229       5,623       4,766     276     5,042       16,152  
Service and fee income   99,292     46,806     146,098       (1,864 )     82,096     26,466     108,562       1,307  
Total underwriting revenues   $ 827,548     $ 180,813     $ 1,008,361       $ 50,364       $ 799,122     $ 133,305     $ 932,427       $ 56,319  
                                       
Loss and loss adjustment expense   545,726     80,136     625,862       31,064       518,314     68,706     587,020       25,655  
Acquisition costs and other   99,201     42,804     142,005       3,324       104,513     21,558     126,071       8,972  
General and administrative   179,622     48,979     228,601       18,540       184,383     34,484     218,867       23,579  
Total underwriting expenses   $ 824,549     $ 171,919     $ 996,468       $ 52,928       $ 807,210     $ 124,748     $ 931,958       $ 58,206  
                                       
Underwriting income (loss)   2,999     8,894     11,893       (2,564 )     (8,088 )   8,557     469       (1,887 )
Non-cash impairment of goodwill   4,884         4,884             3,552         3,552        
Non-cash amortization of intangible assets   4,852     4,576     9,428       (27 )     19,694     5,657     25,351       7,069  
Underwriting income (loss) before amortization and impairment   $ 12,735     $ 13,470     $ 26,205       $ (2,591 )     $ 15,158     $ 14,214     $ 29,372       $ 5,182  
                                       
Underwriting ratios                                      
Loss and loss adjustment expense ratio (9)   76.9 %   59.9 %   74.2 %     66.7 %     72.8 %   64.5 %   71.7 %     66.0 %
Operating expense ratio (Non-GAAP) (10,11)   22.6 %   33.4 %   24.4 %     38.8 %     28.4 %   27.5 %   28.3 %     38.8 %
Combined ratio (Non-GAAP) (10,12)   99.5 %   93.3 %   98.6 %     105.5 %     101.2 %   92.0 %   100.0 %     104.8 %
                                       
Underwriting ratios (before amortization and impairment)                                      
Loss and loss adjustment expense ratio (9)   76.9 %   59.9 %   74.2 %     66.7 %     72.8 %   64.5 %   71.7 %     66.0 %
Operating expense ratio (Non-GAAP) (10,13)   21.3 %   30.0 %   22.7 %     38.9 %     25.1 %   22.2 %   24.7 %     20.6 %
Combined ratio before amortization and impairment (Non-GAAP) (10,14)   98.2 %   89.9 %   96.9 %     105.6 %     97.9 %   86.7 %   96.4 %     86.6 %

NOTE: Loss and loss adjustment expenses for the three months ended December 31, 2017 included $8,096 of unfavorable development on prior accident year loss and loss adjustment expense reserves in the P&C segment, and $1,280 of unfavorable development in the A&H segment, versus $11,754 of unfavorable development in the P&C segment, and $6,176 of unfavorable development in the A&H segment for the three months ended December 31, 2016.

Segment Information - Year to Date
$ in thousands
(Unaudited)

    Twelve Months Ended December 31,      
    2017     2016 (1)
    P&C   A&H   NGHC     Reciprocal
Exchanges
    P&C   A&H   NGHC     Reciprocal
Exchanges (1)
                        (As adjusted)   (As adjusted)   (As adjusted)     (As adjusted)
Gross written premium   $ 3,794,012     $ 581,402     $ 4,375,414       $ 383,773       $ 2,797,660     $ 464,010     $ 3,261,670       $ 241,540  
Net written premium   2,866,650     535,296     3,401,946       175,649       2,533,480     418,668     2,952,148       120,548  
Net earned premium   2,951,022     533,283     3,484,305       169,871       2,470,349     414,427     2,884,776       110,395  
                                       
Ceding commission income   55,263     1,013     56,276       60,180       747     1,331     2,078       43,522  
Service and fee income   397,966     154,614     552,580       5,794       271,835     138,936     410,771       3,862  
Total underwriting revenues   $ 3,404,251     $ 688,910     $ 4,093,161       $ 235,845       $ 2,742,931     $ 554,694     $ 3,297,625       $ 157,779  
                                       
Loss and loss adjustment expense   2,187,779     318,463     2,506,242       119,840       1,721,854     301,210     2,023,064       69,216  
Acquisition costs and other   467,390     154,879     622,269       50,160       379,135     102,730     481,865       15,148  
General and administrative   715,975     171,497     887,472       80,971       549,249     128,333     677,582       65,376  
Total underwriting expenses   $ 3,371,144     $ 644,839     $ 4,015,983       $ 250,971       $ 2,650,238     $ 532,273     $ 3,182,511       $ 149,740  
                                       
Underwriting income (loss)   33,107     44,071     77,178       (15,126 )     92,693     22,421     115,114       8,039  
Non-cash impairment of goodwill   4,884         4,884             3,552         3,552        
Non-cash amortization of intangible assets   42,858     8,871     51,729       6,882       37,537     10,593     48,130       20,795  
Underwriting income before amortization and impairment   $ 80,849     $ 52,942     $ 133,791       $ (8,244 )     $ 133,782     $ 33,014     $ 166,796       $ 28,834  
                                       
Underwriting ratios                                      
Loss and loss adjustment expense ratio (9)   74.1 %   59.7 %   71.9 %     70.5 %     69.7 %   72.7 %   70.1 %     62.7 %
Operating expense ratio (Non-GAAP) (10,11)   24.7 %   32.0 %   25.9 %     38.4 %     26.5 %   21.9 %   25.9 %     30.0 %
Combined ratio (Non-GAAP) (10,12)   98.8 %   91.7 %   97.8 %     108.9 %     96.2 %   94.6 %   96.0 %     92.7 %
                                       
Underwriting ratios (before amortization and impairment)                                      
Loss and loss adjustment expense ratio (9)   74.1 %   59.7 %   71.9 %     70.5 %     69.7 %   72.7 %   70.1 %     62.7 %
Operating expense ratio (Non-GAAP) (10,13)   23.1 %   30.4 %   24.2 %     34.3 %     24.9 %   19.4 %   24.1 %     11.2 %
Combined ratio before amortization and impairment (Non-GAAP) (10,14)   97.2 %   90.1 %   96.1 %     104.8 %     94.6 %   92.1 %   94.2 %     73.9 %

NOTES: (1) Reciprocal Exchanges' column for the twelve months ended December 31, 2016 excludes its operating results from January 1, 2016 to March 31, 2016.

Loss and loss adjustment expenses for the twelve months ended December 31, 2017 included $15,273 of unfavorable development on prior accident year loss and loss adjustment expense reserves in the P&C segment, and $8,826 of favorable development in the A&H segment, versus $5,125 of unfavorable development in the P&C segment, and $9,310 of unfavorable development in the A&H segment for the twelve months ended December 31, 2016.

Reconciliation of Operating Expense Ratio (Non-GAAP)
$ in thousands
(Unaudited)

    Three Months Ended December 31,      
    2017     2016
    P&C   A&H   NGHC     Reciprocal
Exchanges
    P&C   A&H   NGHC     Reciprocal
Exchanges
                        (As adjusted)   (As adjusted)   (As adjusted)     (As adjusted)
Total underwriting expenses   $ 824,549     $ 171,919     $ 996,468       $ 52,928       $ 807,210     $ 124,748     $ 931,958       $ 58,206  
Less: Loss and loss adjustment expense   545,726     80,136     625,862       31,064       518,314     68,706     587,020       25,655  
Less: Ceding commission income   19,000     229     19,229       5,623       4,766     276     5,042       16,152  
Less: Service and fee income   99,292     46,806     146,098       (1,864 )     82,096     26,466     108,562       1,307  
Operating expense   160,531     44,748     205,279       18,105       202,034     29,300     231,334       15,092  
Net earned premium   $ 709,256     $ 133,778     $ 843,034       $ 46,605       $ 712,260     $ 106,563     $ 818,823       $ 38,860  
Operating expense ratio (Non-GAAP)   22.6 %   33.4 %   24.4 %     38.8 %     28.4 %   27.5 %   28.3 %     38.8 %
                                       
Total underwriting expenses   $ 824,549     $ 171,919     $ 996,468       $ 52,928       $ 807,210     $ 124,748     $ 931,958       $ 58,206  
Less: Loss and loss adjustment expense   545,726     80,136     625,862       31,064       518,314     68,706     587,020       25,655  
Less: Ceding commission income   19,000     229     19,229       5,623       4,766     276     5,042       16,152  
Less: Service and fee income   99,292     46,806     146,098       (1,864 )     82,096     26,466     108,562       1,307  
Less: Non-cash impairment of goodwill   4,884         4,884             3,552     3,074     6,626        
Less: Non-cash amortization of intangible assets   4,852     4,576     9,428       (27 )     19,694     5,657     25,351       7,069  
Operating expense before amortization and impairment   150,795     40,172     190,967       18,132       178,788     20,569     199,357       8,023  
Net earned premium   $ 709,256     $ 133,778     $ 843,034       $ 46,605       $ 712,260     $ 106,563     $ 818,823       $ 38,860  
Operating expense ratio before amortization and impairment (Non-GAAP)   21.3 %   30.0 %   22.7 %     38.9 %     25.1 %   19.3 %   24.3 %     20.6 %


Reconciliation of Operating Expense Ratio (Non-GAAP)

$ in thousands
(Unaudited)

    Twelve Months Ended December 31,      
    2017     2016
    P&C   A&H   NGHC     Reciprocal
Exchanges
    P&C   A&H   NGHC     Reciprocal
Exchanges
                        (As adjusted)   (As adjusted)   (As adjusted)     (As adjusted)
Total underwriting expenses   $ 3,371,144     $ 644,839     $ 4,015,983       $ 250,971       $ 2,650,238     $ 532,273     $ 3,182,511       $ 149,740  
Less: Loss and loss adjustment expense   2,187,779     318,463     2,506,242       119,840       1,721,854     301,210     2,023,064       69,216  
Less: Ceding commission income (loss)   55,263     1,013     56,276       60,180       747     1,331     2,078       43,522  
Less: Service and fee income   397,966     154,614     552,580       5,794       271,835     138,936     410,771       3,862  
Operating expense   730,136     170,749     900,885       65,157       655,802     90,796     746,598       33,140  
Net earned premium   $ 2,951,022     $ 533,283     $ 3,484,305       $ 169,871       $ 2,470,349     $ 414,427     $ 2,884,776       $ 110,395  
Operating expense ratio (Non-GAAP)   24.7 %   32.0 %   25.9 %     38.4 %     26.5 %   21.9 %   25.9 %     30.0 %
                                       
Total underwriting expenses   $ 3,371,144     $ 644,839     $ 4,015,983       $ 250,971       $ 2,650,238     $ 532,273     $ 3,182,511       $ 149,740  
Less: Loss and loss adjustment expense   2,187,779     318,463     2,506,242       119,840       1,721,854     301,210     2,023,064       69,216  
Less: Ceding commission income (loss)   55,263     1,013     56,276       60,180       747     1,331     2,078       43,522  
Less: Service and fee income   397,966     154,614     552,580       5,794       271,835     138,936     410,771       3,862  
Less: Non-cash impairment of goodwill   4,884         4,884             3,552     3,074     6,626        
Less: Non-cash amortization of intangible assets   42,858     8,871     51,729       6,882       37,537     10,593     48,130       20,795  
Operating expense before amortization and impairment   682,394     161,878     844,272       58,275       614,713     77,129     691,842       12,345  
Net earned premium   $ 2,951,022     $ 533,283     $ 3,484,305       $ 169,871       $ 2,470,349     $ 414,427     $ 2,884,776       $ 110,395  
Operating expense ratio before amortization and impairment (Non-GAAP)   23.1 %   30.4 %   24.2 %     34.3 %     24.9 %   18.6 %   24.0 %     11.2 %


Premiums by Business Line

$ in thousands
(Unaudited)

    Three Months Ended December 31,
    Gross Written Premium     Net Written Premium     Net Earned Premium
    2017   2016   Change     2017   2016   Change     2017   2016   Change
Property & Casualty       (As adjusted)             (As adjusted)             (As adjusted)    
Personal Auto   $ 574,179     $ 441,128     30.2 %     $ 437,908     $ 402,913     8.7 %     $ 450,552     $ 417,083     8.0 %
Homeowners   139,848     104,696     33.6 %     57,423     93,133     (38.3 )%     66,968     96,358     (30.5 )%
RV/Packaged   40,195     36,659     9.6 %     39,737     36,443     9.0 %     46,182     40,995     12.7 %
Small Business Auto   70,396     65,866     6.9 %     50,495     59,370     (14.9 )%     57,998     62,814     (7.7 )%
Lender-placed insurance   94,263     50,622     86.2 %     83,186     46,690     78.2 %     80,005     87,569     (8.6 )%
Other   11,100     12,670     (12.4 )%     5,331     6,493     (17.9 )%     7,551     7,441     1.5 %
Property & Casualty   929,981     711,641     30.7 %     674,080     645,042     4.5 %     709,256     712,260     (0.4 )%
                                         
Accident & Health   137,207     108,638     26.3 %     125,736     97,103     29.5 %     133,778     106,563     25.5 %
Total National General   $ 1,067,188     $ 820,279     30.1 %     $ 799,816     $ 742,145     7.8 %     $ 843,034     $ 818,823     3.0 %
                                         
Reciprocal Exchanges                                        
Personal Auto   $ 30,424     $ 25,214     20.7 %     $ 17,052     $ 16,161     5.5 %     $ 18,042     $ 15,385     17.3 %
Homeowners   66,844     56,340     18.6 %     21,649     24,884     (13.0 )%     28,115     21,869     28.6 %
Other   726     1,838     (60.5 )%     471     1,307     (64.0 )%     448     1,606     (72.1 )%
Reciprocal Exchanges   $ 97,994     $ 83,392     17.5 %     $ 39,172     $ 42,352     (7.5 )%     $ 46,605     $ 38,860     19.9 %
                                         
Consolidated Total (A)   $ 1,164,382     $ 902,960     29.0 %     $ 838,988     $ 784,497     6.9 %     $ 889,639     $ 857,683     3.7 %

NOTES: (A) Consolidated Total includes eliminations between National General and the Reciprocal Exchanges of $(254) in Personal Auto and $(546) in Homeowners Gross Written Premium in 2017, respectively, and $(220) in Personal Auto and $(491) in Homeowners Gross Written Premium in 2016, respectively.

Premiums by Business Line
$ in thousands
(Unaudited)

    Twelve Months Ended December 31,
    Gross Written Premium     Net Written Premium     Net Earned Premium
    2017   2016   Change     2017   2016   Change     2017   2016   Change
Property & Casualty       (As adjusted)             (As adjusted)             (As adjusted)    
Personal Auto   $ 2,335,958     $ 1,549,091     50.8 %     $ 1,824,932     $ 1,380,125     32.2 %     $ 1,828,304     $ 1,292,563     41.4 %
Homeowners   560,909     412,151     36.1 %     275,013     369,810     (25.6 )%     349,709     353,228     (1.0 )%
RV/Packaged   187,475     165,919     13.0 %     185,993     165,025     12.7 %     175,888     158,256     11.1 %
Small Business Auto   316,958     257,075     23.3 %     246,072     234,101     5.1 %     251,576     217,919     15.4 %
Lender-placed insurance   345,354     376,058     (8.2 )%     313,124     363,896     (14.0 )%     321,995     422,645     (23.8 )%
Other   47,358     37,366     26.7 %     21,516     20,523     4.8 %     23,550     25,738     (8.5 )%
Property & Casualty   3,794,012     2,797,660     35.6 %     2,866,650     2,533,480     13.2 %     2,951,022     2,470,349     19.5 %
                                         
Accident & Health   581,402     464,010     25.3 %     535,296     418,668     27.9 %     533,283     414,427     28.7 %
Total National General   $ 4,375,414     $ 3,261,670     34.1 %     $ 3,401,946     $ 2,952,148     15.2 %     $ 3,484,305     $ 2,884,776     20.8 %
                                         
Reciprocal Exchanges                                        
Personal Auto   $ 132,844     $ 73,680     NA     $ 68,292     $ 44,661     NA     $ 66,565     $ 42,225     NA
Homeowners   247,460     161,510     NA     105,536     71,367     NA     101,648     61,748     NA
Other   3,469     6,350     NA     1,821     4,520     NA     1,658     6,422     NA
Reciprocal Exchanges (A)   $ 383,773     $ 241,540     NA     $ 175,649     $ 120,548     NA     $ 169,871     $ 110,395     NA
                                         
Consolidated Total (B)   $ 4,755,985     $ 3,500,898     35.9 %     $ 3,577,595     $ 3,072,696     16.4 %     $ 3,654,176     $ 2,995,171     22.0 %

NOTES: (A) The Reciprocal Exchanges did not meet the criteria for consolidation under GAAP for the Three Months Ended March 31, 2016.
(B) Consolidated Total includes eliminations between National General and the Reciprocal Exchanges of $(1,120) in Personal Auto and $(2,082) in Homeowners Gross Written Premium in 2017, respectively, and $(726) in Personal Auto and $(1,586) in Homeowners Gross Written Premium in 2016, respectively.

Additional Disclosures

(1) References to operating earnings and basic and diluted operating earnings per share (“EPS”) are non-GAAP financial measures defined by the Company as net income/loss and basic and diluted earnings per share excluding after-tax net gain or loss on investments (including foreign exchange gain or loss), other-than-temporary impairment losses, bargain purchase gains, earnings or losses of equity method investments (related parties), deferred tax asset impairment, non-cash impairment of goodwill and non-cash amortization of intangible assets. The Company believes operating earnings and basic and diluted operating EPS are relevant measures of the Company’s profitability because operating earnings and basic and diluted operating EPS contain the components of net income upon which the Company’s management has the most influence and excludes factors outside management’s direct control and non-recurring items. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(2) Total investments includes $347,548 and $373,688 in related parties at December 31, 2017 and December 31, 2016, respectively.

(3) Reinsurance recoverable includes $17,240 and $37,046 from related parties at December 31, 2017 and December 31, 2016, respectively.

(4) Other includes $2,334 and $1,298 from related parties at December 31, 2017 and December 31, 2016, respectively.

(5) Reinsurance payable includes $543 and $33,419 due to related parties at December 31, 2017 and December 31, 2016, respectively.

(6) Accounts payable and accrued expenses includes $140,098 and $29,271 to related parties at December 31, 2017 and December 31, 2016, respectively.

(7) Common stock: $0.01 par value - authorized 150,000,000 shares, issued and outstanding 106,697,648 shares - December 31, 2017; authorized 150,000,000 shares, issued and outstanding 106,428,092 shares - December 31, 2016.

(8) Preferred stock: $0.01 par value - authorized 10,000,000 shares, issued and outstanding 2,565,000 shares - December 31, 2017; authorized 10,000,000 shares, issued and outstanding 2,565,000 shares - December 31, 2016.

(9) Loss and loss adjustment expense ratio is calculated by dividing loss and loss adjustment expense by net earned premium.

(10) Operating expense ratio and combined ratio are considered non-GAAP financial measures under applicable SEC rules because a component of those ratios, operating expense, is calculated by offsetting acquisition and other underwriting costs and general and administrative expenses by ceding commission income and service and fee income. Management uses operating expense ratio (non-GAAP) and combined ratio (non-GAAP) to evaluate financial performance against historical results and establish targets on a consolidated basis. The Company believes this presentation enhances the understanding of our results by eliminating what we believe are volatile and unusual events and presenting the ratios with what we believe are the underlying run rates of the business. Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(11) Operating expense ratio is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by dividing operating expense by net earned premium. Operating expense consists of the sum of acquisition and other underwriting costs and general and administrative expenses less ceding commission income and service and fee income. The ratio is used as an indicator of the Company’s efficiency in acquiring and servicing its business. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(12) Combined ratio is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by adding the loss and loss adjustment expense ratio and the operating expense ratio (non-GAAP) together. The ratio is used as an indicator of the Company’s underwriting discipline, efficiency in acquiring and servicing its business, and overall underwriting profit. A combined ratio under 100% generally indicates an underwriting profit, while over 100% an underwriting loss. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General.

(13) Operating expense ratio before amortization and impairment is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by dividing the operating expense before amortization and impairment by net earned premium. Operating expense before amortization and impairment consists of the sum of acquisition and other underwriting costs and general and administrative expenses less ceding commission income and service and fee income less non-cash amortization of intangible assets and non-cash impairment of goodwill. The ratio is used as an indicator of the Company’s efficiency in acquiring and servicing its business. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(14) Combined ratio before amortization and impairment is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by adding the loss and loss adjustment expense ratio and the operating expense ratio before amortization and impairment (non-GAAP) together. The ratio is used as an indicator of the Company’s underwriting discipline, efficiency in acquiring and servicing its business, and overall underwriting profit. A combined ratio under 100% generally indicates an underwriting profit, while over 100% an underwriting loss. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(15) Trailing twelve month operating return on average equity is the ratio of the previous twelve months operating earnings to average shareholders’ equity for the periods presented. Average shareholders’ equity is the sum of the shareholders’ equity excluding preferred stock at the beginning and end of the period presented divided by two. In the opinion of the Company’s management this ratio is an important indicator of how well management creates value for its shareholders through its operating activities and capital management. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of net income to operating earnings, which is the Non-GAAP component of the operating return on average equity.

(16) Combined ratio excluding losses from the California fires, and is calculated by taking the combined ratio as defined in Note 14, and adjusting it to exclude the total net losses of $52.9 million from these events. The company believes this measure enhances investors’ understanding of our results by eliminating what we believe are volatile and unusual events.

    Q4’17 Combined
Ratio
  Impact of Fire
Losses
  Q4’17 Combined
Ratio Excluding
Fire Losses
P&C Segment   98.2%   7.5%   90.7%
             
Overall NGHC   96.9%   6.3%   90.6%
             

Investor Contact

Christine Worley
Director of Investor Relations
Phone: 212-380-9462
Email: Christine.Worley@NGIC.com 

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Source: National General Holdings Corp