Ducommun Inc
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Industrials : Aerospace & Defense | Small Cap Blend
Company profile

Ducommun Incorporated is a global provider of engineering and manufacturing services for various products and failure applications used primarily in the aerospace, defense, industrial, natural resources, medical and other industries. The Company is a solution-based provider, offering a range of value-added products and services in its primary businesses of electronics, structures and integrated solutions. The Company operates through two segments: Electronic Systems (ES) and Structural Systems (SS). The ES has over three product offerings in electronics manufacturing for various applications, including complex cable assemblies and interconnect systems, printed circuit board assemblies, and electronic, electromechanical and mechanical assemblies. The SS segment offers over three product offerings to support a customer base, including commercial aircraft, military fixed-wing aircraft, and military and commercial rotary-wing aircraft.

Closing Price
$33.14
Day's Change
1.08 (3.37%)
Bid
--
Ask
--
B/A Size
--
Day's High
33.30
Day's Low
31.86
Volume
(Below Average)
Volume:
61,735

10-day average volume:
70,651
61,735

National General Holdings Corp. Reports Second Quarter 2020 Results

9:05 am ET July 31, 2020 (Globe Newswire) Print

National General Holdings Corp. (Nasdaq: NGHC) reported second quarter 2020 net income of $157.6 million or $1.37 per diluted share, compared to net income of $69.0 million or $0.60 per diluted share in the second quarter of 2019. Second quarter 2020 operating earnings (non-GAAP) were $157.6 million or $1.36 per diluted share compared to $78.1 million or $0.67 per diluted share in the second quarter of 2019.

Second Quarter 2020 Highlights versus Second Quarter 2019*

-- Gross written premium grew by $50.4 million to $1,243.2 million compared to the prior year's quarter due to our P&C segment growth of 3.2%, driven by the acquisition of National Farmers Union Property and Casualty Company ("Farmers Union Insurance") in the third quarter of 2019, and organic growth, largely offset by the premium refund provided due to lower miles driven as a result of the COVID-19 pandemic; and our A&H domestic segment growth of 20.2%, excluding our previously sold A&H international business.

-- The overall combined ratio was 80.5% compared to 90.9% in the prior year's quarter, excluding non-cash amortization of intangible assets. The P&C segment reported an improved combined ratio to 83.6% from 92.6% in the prior year's quarter driven by our continued strong underwriting and recent declines in miles driven. The P&C combined ratio includes prior year unfavorable loss development of $8.6 million compared to $10.4 million unfavorable loss development in the prior year's quarter, and $35.3 million of catastrophe losses related to weather-related events compared to $18.4 million of catastrophe losses in the prior year's quarter. The A&H segment reported a decrease in the combined ratio to 65.0% from 82.6% in the prior year's quarter, driven by strong operating results in our small group self-funded and individual products, absence of our international business which was sold in the fourth quarter of 2019, and growth in service and fee income of 51.3%. The A&H combined ratio includes $11.4 million of favorable loss development compared to $8.1 million of favorable loss development in the prior year's quarter.

-- Stockholders' equity was $3.0 billion and fully diluted book value per share was $22.02 at June 30, 2020, growth of 13.0% and 15.5%, respectively, from December 31, 2019. Excluding accumulated other comprehensive income, fully diluted book value per share was $20.40 at June 30, 2020, growth of 10.7%, from December 31, 2019. Our trailing twelve-month operating return on average equity (ROE) was 18.1% as of June 30, 2020.

-- Second quarter of 2020 operating earnings (non-GAAP)excludes the following, net of tax: $0.1 million loss on equity method investments, $4.4 million or $0.04 per share of net gain on investments and $4.2 million or $0.04 per share of non-cash amortization of intangible assets.

-- Repurchased 459,083 shares during the second quarter of 2020 as part of our share repurchase program.

-- Agreement announced on July 7, 2020 to be acquired by Allstate for expected total consideration of $34.50 per share cash (consisting of $32.00 in cash and an up to $2.50 per share closing dividend), subject to shareholder and regulatory approval and other customary closing conditions.

Barry Karfunkel, National General's CEO, stated: "Our well diversified platform continues to perform well. With our recently announced agreement to be acquired by Allstate, we look forward to contributing to the greater Allstate. I want to personally thank each and every one of the National General team members for their outstanding and continued work during these unprecedented times and for their continuing contribution to the success of the pending acquisition."

*NOTE: Unless specified otherwise, discussion of our second quarter 2020 and 2019 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 Second Quarter 2020 as Compared to Second Quarter 2019

-- Property & Casualty - Gross written premium grew by 3.2% to $1,053.5 million, net written premium increased by 0.4% to $789.4 million, and net earned premium increased by 2.9% to $842.0 million. P&C gross written premium growth was driven by $47.7 million of added premiums from the acquisition of Farmers Union Insurance, and organic growth, largely offset by the premium refund provided due to lower miles driven as a result of the COVID-19 pandemic. Service and fee income was $112.0 million compared to $113.1 million in the prior year's quarter. Excluding non-cash amortization of intangible assets, the combined ratio was 83.6% with a loss and LAE ratio of 59.8% and an expense ratioof 23.8%, versus a prior year combined ratio of 92.6% with a loss and LAE ratio of 72.6% and an expense ratio of 20.0%. The loss and LAE ratio was impacted by pre-tax catastrophe losses of approximately $35.3 million primarily related to weather-related events in the second quarter of 2020, compared to $18.4 million of losses in the second quarter of 2019. Unfavorable loss development was $8.6 million in the second quarter of 2020 primarily driven by small business auto, compared to unfavorable loss development of $10.4 million in the second quarter of 2019.

-- Accident & Health - Gross written premium grew by $18.0 million compared to the prior year's quarter due to growth in both our small group self-funded and individual products. Excluding our A&H international business, our A&H domestic segment grew by 20.2% to $189.7 million. Service and fee income grew 51.3% to $80.1 million compared to $52.9 million in the prior year's quarter. Excluding non-cash amortization of intangible assets, the combined ratio was 65.0% with a loss and LAE ratio of 39.5% and an expense ratio of 25.5%, versus a prior year combined ratio of 82.6% with a loss and LAE ratio of 52.0% and an expense ratio of 30.6%. The loss and LAE ratio reflects strong performance in both small group self-funded and individual products. Favorable loss development was $11.4 million in the second quarter of 2020, compared to favorable loss development of $8.1 million in the second quarter of 2019.

-- Reciprocal Exchanges - Results for the Reciprocal Exchanges are not included in net income available to NGHC common stockholders. Gross written premium was $98.4 million, net written premium was $57.3 million, and net earned premium was $54.8 million. Reciprocal Exchanges combined ratio excluding non-cash amortization of intangible assets was 83.1% with a loss and LAE ratio of 54.8% and an expense ratioof 28.3%.

Second quarter of 2020 net investment income decreased to $30.5 million, compared to $35.9 million in the second quarter of 2019. Total investments and cash and cash equivalents (including restricted cash) were $5.2 billion as of June 30, 2020. Accumulated other comprehensive income increased to a $186.9 million gain at June 30, 2020, from a $74.5 million gain at December 31, 2019, primarily due to market improvement.

Interest expense was $11.8 million, down from $12.9 million in the prior year's quarter. Debt was $682.3 million at June 30, 2020, compared to $686.0 million at December 31, 2019.

The second quarter of 2020 provision for income taxes was $49.0 million and the effective tax rate for the quarter was 22.7% compared with income taxes of $22.3 million and an effective rate of 22.2% in the second quarter of 2019.

Stockholders' equity was $2,995.1 million at June 30, 2020, growth of 13.0% from $2,649.5 million at December 31, 2019. Fully diluted book value per share was $22.02 at June 30, 2020, growth of 15.5% from $19.06 at December 31, 2019. Excluding accumulated other comprehensive income, fully diluted book value per share was $20.40 at June 30, 2020, growth of 10.7%, from December 31, 2019. Our trailing twelve-month operating return on average equity (ROE) was 18.1% as of June 30, 2020.

Year-to-Date P&C Segment Notable Large Losses
Year  Quarter  Event                   P&C Notable Large Losses and LAE  P&C Loss and LAE Ratio Points*  EPS Impact After Tax
                                       ($ millions)
2020  Q2       Weather-related Events  $35.3                             4.2%                            $0.24
2020  Q1       Weather-related Events  $8.1                              0.9%                            $0.06
2019  Q2       Weather-related Events  $18.4                             2.2%                            $0.13
2019  Q1       Winter Weather          $12.1                             1.6%                            $0.08

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

Additional item -

Homeowners Quota Share - Effective July 1, 2020, we cede 20.0% of net liability and receive a 37.0% ceding commission on in-force, new and renewal business, under our homeowners quota share reinsurance agreement.

About National General Holdings Corp.

National General Holdings Corp. (NASDAQ: NGHC), 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.

IMPORTANT INFORMATION FOR INVESTORS

Additional Information and Where to Find It

This communication may be deemed solicitation material in respect of the proposed acquisition of National General Holdings Corp. (the "Company") by The Allstate Corporation. In connection with the merger, the Company plans to file with the Securities and Exchange Commission and furnish its stockholders a proxy statement. Additionally, the Company will file other relevant materials with the Securities and Exchange Commission in connection with the proposed transaction.

The materials to be filed by the Company with the Securities and Exchange Commission may be obtained free of charge at the Securities and Exchange Commission's web site at www.sec.gov. In addition, stockholders also may obtain free copies of the proxy statement, when available, from the Company by contacting National General Holdings Corp. Investor Relations at 59 Maiden Lane, 38th Floor New York, New York 10038, telephone number (212) 380-9462 or InvestorRelations@ngic.com.

INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES TO THE MERGER.

Participants in the Solicitation

The Company and its directors, executive officers and other members of management and employees, under the Securities and Exchange Commission rules, may be deemed to be participants in the solicitation of proxies of the Company's stockholders in connection with the proposed merger. Investors and security holders may obtain more detailed information regarding the names, affiliations and interests of certain of the Company's executive officers and directors in the solicitation by reading the Company's proxy statement for its 2020 annual meeting of stockholders and the proxy statement and other relevant materials which may be filed with the Securities and Exchange Commission in connection with the merger when and if they become available. Information concerning the interests of the Company's participants in the solicitation, which may, in some cases, be different than those of the Company's stockholders generally, will be set forth in the proxy statement relating to the merger when and if it becomes available. Additional information regarding the Company's executive officers and directors in the solicitation is available by reading the Company's proxy statement for its 2020 annual meeting of stockholders.

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 us. 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, plans and expectations related to our proposed merger with The Allstate Corporation ("Allstate"), including anticipated timing for closing of the merger, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Allstate, the inability to complete the proposed merger due to the failure to obtain stockholder approval for the proposed merger or the failure to satisfy other conditions to completion of the proposed merger, the possibility that competing offers will be made, 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 potential effect of changes in LIBOR reporting practices, the effects of pandemics or other widespread health problems such as the ongoing COVID-19 pandemic on our business, including our investment portfolio, and the national and global economy generally, 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, the effect of unpredictable catastrophic losses, 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 third party vendors or 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 - Second Quarter

$ in thousands

(Unaudited)

                                                                                     Three Months Ended June 30,
                                                                                     2020                                                     2019
                                                                                     NGHC             Reciprocal Exchanges  Consolidated      NGHC             Reciprocal Exchanges  Consolidated
Revenues:
Gross written premium                                                                $    1,243,165   $      98,436         $    1,341,601    $   1,192,762    $      121,146        $    1,313,908
Net written premium                                                                  957,640          57,268                1,014,908         939,178          56,220                995,398
Net earned premium                                                                   1,010,782        54,785                1,065,567         984,021          46,630                1,030,651
Ceding commission income                                                             35,530           11,110                46,640            43,346           16,846                60,192
Service and fee income                                                               192,023          2,336                 180,592           166,049          1,516                 148,908
Net investment income                                                                30,523           2,012                 31,175            35,949           2,124                 35,131
Net gain (loss) on investments                                                       5,511            (353          )       5,158             (5,274        )  44                    (5,230         )
Total revenues                                                                       $    1,274,369   $      69,890         $    1,329,132    $   1,224,091    $      67,160         $    1,269,652
Expenses:
Loss and loss adjustment expense                                                     $    570,439     $      30,007         $    600,446      $   680,246      $      35,289         $    715,535
Acquisition costs and other underwriting expenses                                    219,278          10,100                229,378           185,951          8,175                 194,126
General and administrative expenses                                                  257,318          18,858                262,409           244,827          21,597                247,767
Interest expense                                                                     11,779           1,360                 11,779            12,925           2,942                 12,925
Total expenses                                                                       $    1,058,814   $      60,325         $    1,104,012    $   1,123,949    $      68,003         $    1,170,353
Income (loss) before provision (benefit) for income taxes                            $    215,555     $      9,565          $    225,120      $   100,142      $      (843    )      $    99,299
Provision (benefit) for income taxes                                                 48,981           1,526                 50,507            22,266           (25            )      22,241
Net income (loss) before non-controlling interest and dividends on preferred shares  166,574          8,039                 174,613           77,876           (818           )      77,058
Less: net income (loss) attributable to noncontrolling interest                      --               8,039                 8,039             --               (818           )      (818           )
Net income before dividends on preferred shares                                      166,574          --                    166,574           77,876           --                    77,876
Less: dividends on preferred shares                                                  8,925            --                    8,925             8,925            --                    8,925
Net income available to common stockholders                                          $    157,649     $      --             $    157,649      $   68,951       $      --             $    68,951

NOTES: Consolidated column includes eliminations as follows: (A) $(13,767), (B) $(1,360), (C) $(15,127), (D) $(13,767), (E) $(1,360), (F) $(15,127), (G) $(18,657), (H) $(2,942), (I) $(21,599), (J) $(18,657), (K) $(2,942) and (L) $(21,599).

Income Statement - Year To Date

$ in thousands

(Unaudited)

                                                                                     Six Months Ended June 30,
                                                                                     2020                                                          2019
                                                                                     NGHC              Reciprocal Exchanges  Consolidated          NGHC              Reciprocal Exchanges  Consolidated
Revenues:
Gross written premium                                                                $    2,627,866    $      190,289        $    2,818,155        $    2,596,971    $      226,715        $    2,823,686
Net written premium                                                                  2,111,948         112,563               2,224,511             2,054,887         105,175               2,160,062
Net earned premium                                                                   2,028,390         112,383               2,140,773             1,902,520         92,288                1,994,808
Ceding commission income                                                             72,121            24,824                96,945                94,346            35,380                129,726
Service and fee income                                                               383,180           3,493                 360,033               346,437           2,886                 314,415
Net investment income                                                                60,270            4,195                 61,418                70,232            4,294                 68,576
Net gain (loss) on investments                                                       (557           )  (1,146         )      (1,703         )      (4,508         )  (700           )      (5,208         )
Total revenues                                                                       $    2,543,404    $      143,749        $    2,657,466        $    2,409,027    $      134,148        $    2,502,317
Expenses:
Loss and loss adjustment expense                                                     $    1,220,070    $      72,374         $    1,292,444        $    1,290,030    $      77,314         $    1,367,344
Acquisition costs and other underwriting expenses                                    437,023           20,597                457,620               389,284           16,760                406,044
General and administrative expenses                                                  518,197           38,421                529,978               487,660           43,109                495,861
Interest expense                                                                     23,559            3,047                 23,559                25,924            5,950                 25,924
Total expenses                                                                       $    2,198,849    $      134,439        $    2,303,601        $    2,192,898    $      143,133        $    2,295,173
Income (loss) before provision (benefit) for income taxes                            $    344,555      $      9,310          $    353,865          $    216,129      $      (8,985  )      $    207,144
Provision (benefit) for income taxes                                                 77,222            1,457                 78,679                46,495            (1,748         )      44,747
Net income (loss) before non-controlling interest and dividends on preferred shares  267,333           7,853                 275,186               169,634           (7,237         )      162,397
Less: net income (loss) attributable to noncontrolling interest                      --                7,853                 7,853                 --                (7,237         )      (7,237         )
Net income before dividends on preferred shares                                      267,333           --                    267,333               169,634           --                    169,634
Less: dividends on preferred shares                                                  16,800            --                    16,800                16,800            --                    16,800
Net income available to common stockholders                                          $    250,533      $      --             $    250,533          $    152,834      $      --             $    152,834

NOTES: Consolidated column includes eliminations as follows: (A) $(26,640), (B) $(3,047), (C) $(29,687), (D) $(26,640), (E) $(3,047), (F) $(29,687) (G) $(34,908), (H) $(5,950), (I) $(40,858), (J) $(34,908), (K) $(5,950) and (L) $(40,858).

Earnings and Per Share Data

$ in thousands, except shares and per share data

(Unaudited)

                                                       Three Months Ended June 30,    Six Months Ended June 30,
                                                       2020            2019           2020            2019
Net income available to common stockholders            $     157,649   $     68,951   $     250,533   $     152,834
Basic net income per common share                      $     1.39      $     0.61     $     2.21      $     1.35
Diluted net income per common share                    $     1.37      $     0.60     $     2.17      $     1.33
Operating earnings attributable to NGHC (non-GAAP)     $     157,643   $     78,140   $     263,402   $     167,856
Basic operating earnings per common share (non-GAAP)   $     1.39      $     0.69     $     2.32      $     1.48
Diluted operating earnings per common share (non-GAAP) $     1.36      $     0.67     $     2.27      $     1.45
Dividends declared per common share                    $     0.05      $     0.04     $     0.10      $     0.08
Weighted average number of basic shares outstanding    113,542,628     113,178,552    113,549,952     113,097,084
Weighted average number of diluted shares outstanding  115,720,069     116,050,267    115,898,110     116,062,721
Shares outstanding, end of period                      113,397,545     113,215,632
Fully diluted shares outstanding, end of period        115,574,986     116,087,347
Book value per share                                   $     22.44     $     17.92
Fully diluted book value per share                     $     22.02     $     17.48

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

$ in thousands, except per share data

(Unaudited)

                                                         Three Months Ended June 30,      Six Months Ended June 30,
                                                         2020             2019            2020             2019
Net income available to common stockholders              $   157,649      $   68,951      $   250,533      $   152,834
Add (subtract):
Equity in (earnings) losses of equity method investments 160              (731       )    3,888            203
Net (gain) loss on investments                           (5,511      )    5,274           557              4,508
Non-cash amortization of intangible assets               5,343            7,089           11,845           14,305
Income tax expense (benefit)                             2                (2,443     )    (3,421      )    (3,994      )
Operating earnings attributable to NGHC (non-GAAP)       $   157,643      $   78,140      $   263,402      $   167,856
Operating earnings per common share (non-GAAP):
Basic operating earnings per common share (non-GAAP)     $   1.39         $   0.69        $   2.32         $   1.48
Diluted operating earnings per common share (non-GAAP)   $   1.36         $   0.67        $   2.27         $   1.45

Balance Sheet

$ in thousands

(Unaudited)

                                                            June 30, 2020                                                  December 31, 2019
ASSETS                                                      NGHC              Reciprocal Exchanges  Consolidated           NGHC             Reciprocal Exchanges  Consolidated
Total investments                                           $    4,853,180    $      340,103        $    5,085,750         $    4,632,960   $      329,494        $    4,854,998
Cash and cash equivalents, including restricted cash        334,771           237                   335,008                163,480          983                   164,463
Premiums and other receivables, net                         1,438,085         49,649                1,487,734              1,373,089        55,859                1,428,948
Reinsurance balances                                        1,614,713         196,005               1,810,718              1,745,036        225,019               1,970,055
Intangible assets, net                                      347,686           3,135                 350,821                362,598          3,225                 365,823
Goodwill                                                    179,328           --                    179,328                179,328          --                    179,328
Other                                                       776,916           29,364                768,484                798,675          29,070                792,919
Total assets                                                $    9,544,679    $      618,493        $    10,017,843        $    9,255,166   $      643,650        $    9,756,534
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid loss and loss adjustment expense reserves            $    2,626,314    $      200,270        $    2,826,584         $    2,680,628   $      205,786        $    2,886,414
Unearned premiums and other revenue                         2,102,044         226,403               2,328,447              2,059,688        252,553               2,312,241
Reinsurance payable                                         437,989           23,907                461,896                527,155          35,689                562,844
Accounts payable and accrued expenses                       320,176           45,549                327,929                306,869          43,323                315,366
Debt                                                        682,266           107,533               682,266                686,006          107,456               686,006
Other                                                       380,766           30,279                411,045                345,366          30,803                376,169
Total liabilities                                           $    6,549,555    $      633,941        $    7,038,167         $    6,605,712   $      675,610        $    7,139,040
Stockholders' equity:
Preferred stock                                             $    450,000      $      --             $    450,000           $    450,000     $      --             $    450,000
Common stock                                                1,139             --                    1,139                  1,134            --                    1,134
Treasury stock, at cost                                     (8,482         )  --                    (8,482          )      --               --                    --
Additional paid-in capital                                  1,069,152         --                    1,069,152              1,065,634        --                    1,065,634
Accumulated other comprehensive income                      186,864           --                    186,864                74,548           --                    74,548
Retained earnings                                           1,296,451         --                    1,296,451              1,058,138        --                    1,058,138
Total National General Holdings Corp. stockholders' equity  2,995,124         --                    2,995,124              2,649,454        --                    2,649,454
Noncontrolling interest                                     --                (15,448        )      (15,448         )      --               (31,960        )      (31,960        )
Total stockholders' equity                                  $    2,995,124    $      (15,448 )      $    2,979,676         $    2,649,454   $      (31,960 )      $    2,617,494
Total liabilities and stockholders' equity                  $    9,544,679    $      618,493        $    10,017,843        $    9,255,166   $      643,650        $    9,756,534

NOTES: Consolidated column includes eliminations as follows: (A) $(107,533), (B) $(37,796), (C) $(145,329), (D) $(37,796), (E) $(107,533), (F) $(145,329), (G) $(145,329) (H) $(107,456), (I) $(34,826), (J) $(142,282), (K) $(34,826), (L) $(107,456), (M) $(142,282) and (N) $(142,282).

Segment Information - Second Quarter

$ in thousands

(Unaudited)

                                                               Three Months Ended June 30,
                                                               2020                                                                2019
                                                               P&C              A&H            NGHC               Reciprocal       P&C              A&H            NGHC               Reciprocal Exchanges
                                                                                                                  Exchanges
Gross written premium                                          $   1,053,508    $   189,657    $    1,243,165     $   98,436       $   1,021,090    $   171,672    $   1,192,762      $      121,146
Net written premium                                            789,428          168,212        957,640            57,268           786,471          152,707        939,178            56,220
Net earned premium                                             841,985          168,797        1,010,782          54,785           817,972          166,049        984,021            46,630
Ceding commission income                                       35,059           471            35,530             11,110           39,418           3,928          43,346             16,846
Service and fee income                                         111,955          80,068         192,023            2,336            113,112          52,937         166,049            1,516
Total underwriting revenues                                    $   988,999      $   249,336    $    1,238,335     $   68,231       $   970,502      $   222,914    $   1,193,416      $      64,992
Loss and loss adjustment expense                               503,784          66,655         570,439            30,007           593,922          86,324         680,246            35,289
Acquisition costs and other underwriting expenses              152,384          66,894         219,278            10,100           137,950          48,001         185,951            8,175
General and administrative expenses                            199,327          57,991         257,318            18,858           183,535          61,292         244,827            21,597
Total underwriting expenses                                    $   855,495      $   191,540    $    1,047,035     $   58,965       $   915,407      $   195,617    $   1,111,024      $      65,061
Underwriting income (loss)                                     133,504          57,796         191,300            9,266            55,095           27,297         82,392             (69            )
Non-cash amortization of intangible assets                     4,041            1,302          5,343              30               5,412            1,677          7,089              12
Underwriting income (loss) before amortization and impairment  $   137,545      $   59,098     $    196,643       $   9,296        $   60,507       $   28,974     $   89,481         $      (57     )
Underwriting ratios
Loss and loss adjustment expense ratio                         59.8          %  39.5        %  56.4           %   54.8       %     72.6          %  52.0        %  69.1          %    75.7           %
Operating expense ratio (Non-GAAP)                             24.3          %  26.3        %  24.6           %   28.3       %     20.7          %  31.6        %  22.5          %    24.5           %
Combined ratio (Non-GAAP)                                      84.1          %  65.8        %  81.0           %   83.1       %     93.3          %  83.6        %  91.6          %    100.2          %
Underwriting ratios (before amortization and impairment)
Loss and loss adjustment expense ratio                         59.8          %  39.5        %  56.4           %   54.8       %     72.6          %  52.0        %  69.1          %    75.7           %
Operating expense ratio (Non-GAAP)                             23.8          %  25.5        %  24.1           %   28.3       %     20.0          %  30.6        %  21.8          %    24.4           %
Combined ratio before amortization and impairment (Non-GAAP)   83.6          %  65.0        %  80.5           %   83.1       %     92.6          %  82.6        %  90.9          %    100.1          %

(A) Loss and loss adjustment expenses for the three months ended June 30, 2020 included $8,584 of unfavorable loss development on prior accident year loss and loss adjustment expense reserves in the P&C segment, and $11,430 of favorable loss development in the A&H segment, versus $10,396 of unfavorable loss development in the P&C segment, and $8,135 of favorable loss development in the A&H segment for the three months ended June 30, 2019.

Segment Information - Year To Date

$ in thousands

(Unaudited)

                                                               Six Months Ended June 30,
                                                               2020                                                                  2019
                                                               P&C               A&H            NGHC               Reciprocal        P&C               A&H            NGHC                 Reciprocal Exchanges
                                                                                                                   Exchanges
Gross written premium                                          $    2,251,184    $   376,682    $    2,627,866     $   190,289       $    2,166,755    $   430,216    $    2,596,971       $      226,715
Net written premium                                            1,775,520         336,428        2,111,948          112,563           1,701,999         352,888        2,054,887            105,175
Net earned premium                                             1,694,887         333,503        2,028,390          112,383           1,574,891         327,629        1,902,520            92,288
Ceding commission income                                       71,090            1,031          72,121             24,824            87,827            6,519          94,346               35,380
Service and fee income                                         222,588           160,592        383,180            3,493             232,488           113,949        346,437              2,886
Total underwriting revenues                                    $    1,988,565    $   495,126    $    2,483,691     $   140,700       $    1,895,206    $   448,097    $    2,343,303       $      130,554
Loss and loss adjustment expense                               1,071,814         148,256        1,220,070          72,374            1,118,957         171,073        1,290,030            77,314
Acquisition costs and other underwriting expenses              301,658           135,365        437,023            20,597            283,435           105,849        389,284              16,760
General and administrative expenses                            400,454           117,743        518,197            38,421            367,730           119,930        487,660              43,109
Total underwriting expenses                                    $    1,773,926    $   401,364    $    2,175,290     $   131,392       $    1,770,122    $   396,852    $    2,166,974       $      137,183
Underwriting income (loss)                                     214,639           93,762         308,401            9,308             125,084           51,245         176,329              (6,629         )
Non-cash amortization of intangible assets                     9,228             2,617          11,845             60                10,897            3,408          14,305               23
Underwriting income (loss) before amortization and impairment  $    223,867      $   96,379     $    320,246       $   9,368         $    135,981      $   54,653     $    190,634         $      (6,606  )
Underwriting ratios
Loss and loss adjustment expense ratio                         63.2           %  44.5        %  60.1           %   64.4        %     71.0           %  52.2        %  67.8           %     83.8           %
Operating expense ratio (Non-GAAP)                             24.1           %  27.4        %  24.6           %   27.3        %     21.0           %  32.1        %  22.9           %     23.4           %
Combined ratio (Non-GAAP)                                      87.3           %  71.9        %  84.7           %   91.7        %     92.0           %  84.3        %  90.7           %     107.2          %
Underwriting ratios (before amortization and impairment)
Loss and loss adjustment expense ratio                         63.2           %  44.5        %  60.1           %   64.4        %     71.0           %  52.2        %  67.8           %     83.8           %
Operating expense ratio (Non-GAAP)                             23.6           %  26.6        %  24.1           %   27.3        %     20.3           %  31.1        %  22.2           %     23.4           %
Combined ratio before amortization and impairment (Non-GAAP)   86.8           %  71.1        %  84.2           %   91.7        %     91.3           %  83.3        %  90.0           %     107.2          %

(A) Loss and loss adjustment expenses for the six months ended June 30, 2020 included $13,055 of unfavorable loss development on prior accident year loss and loss adjustment expense reserves in the P&C segment, and $16,238 of favorable loss development in the A&H segment, versus $4,882 of unfavorable loss development in the P&C segment, and $18,987 of favorable loss development in the A&H segment for the six months ended June 30, 2019.

Reconciliation of Operating Expense Ratio (Non-GAAP)

$ in thousands

(Unaudited)

                                                                       Three Months Ended June 30,
                                                                       2020                                                                   2019
                                                                       P&C            A&H            NGHC              Reciprocal Exchanges   P&C            A&H            NGHC              Reciprocal Exchanges
Total underwriting expenses                                            $   855,495    $   191,540    $   1,047,035     $      58,965          $   915,407    $   195,617    $   1,111,024     $      65,061
Less: Loss and loss adjustment expense                                 503,784        66,655         570,439           30,007                 593,922        86,324         680,246           35,289
Less: Ceding commission income                                         35,059         471            35,530            11,110                 39,418         3,928          43,346            16,846
Less: Service and fee income                                           111,955        80,068         192,023           2,336                  113,112        52,937         166,049           1,516
Operating expense (Non-GAAP)                                           204,697        44,346         249,043           15,512                 168,955        52,428         221,383           11,410
Net earned premium                                                     $   841,985    $   168,797    $   1,010,782     $      54,785          $   817,972    $   166,049    $   984,021       $      46,630
Operating expense ratio (Non-GAAP)                                     24.3        %  26.3        %  24.6          %   28.3          %        20.7        %  31.6        %  22.5          %   24.5          %
Total underwriting expenses                                            $   855,495    $   191,540    $   1,047,035     $      58,965          $   915,407    $   195,617    $   1,111,024     $      65,061
Less: Loss and loss adjustment expense                                 503,784        66,655         570,439           30,007                 593,922        86,324         680,246           35,289
Less: Ceding commission income                                         35,059         471            35,530            11,110                 39,418         3,928          43,346            16,846
Less: Service and fee income                                           111,955        80,068         192,023           2,336                  113,112        52,937         166,049           1,516
Less: Non-cash amortization of intangible assets                       4,041          1,302          5,343             30                     5,412          1,677          7,089             12
Operating expense before amortization and impairment (Non-GAAP)        200,656        43,044         243,700           15,482                 163,543        50,751         214,294           11,398
Net earned premium                                                     $   841,985    $   168,797    $   1,010,782     $      54,785          $   817,972    $   166,049    $   984,021       $      46,630
Operating expense ratio before amortization and impairment (Non-GAAP)  23.8        %  25.5        %  24.1          %   28.3          %        20.0        %  30.6        %  21.8          %   24.4          %

Reconciliation of Operating Expense Ratio (Non-GAAP)

$ in thousands

(Unaudited)

                                                                       Six Months Ended June 30,
                                                                       2020                                                                       2019
                                                                       P&C               A&H            NGHC               Reciprocal Exchanges   P&C               A&H            NGHC               Reciprocal Exchanges
Total underwriting expenses                                            $    1,773,926    $   401,364    $    2,175,290     $      131,392         $    1,770,122    $   396,852    $    2,166,974     $      137,183
Less: Loss and loss adjustment expense                                 1,071,814         148,256        1,220,070          72,374                 1,118,957         171,073        1,290,030          77,314
Less: Ceding commission income                                         71,090            1,031          72,121             24,824                 87,827            6,519          94,346             35,380
Less: Service and fee income                                           222,588           160,592        383,180            3,493                  232,488           113,949        346,437            2,886
Operating expense (Non-GAAP)                                           408,434           91,485         499,919            30,701                 330,850           105,311        436,161            21,603
Net earned premium                                                     $    1,694,887    $   333,503    $    2,028,390     $      112,383         $    1,574,891    $   327,629    $    1,902,520     $      92,288
Operating expense ratio (Non-GAAP)                                     24.1           %  27.4        %  24.6           %   27.3           %       21.0           %  32.1        %  22.9           %   23.4           %
Total underwriting expenses                                            $    1,773,926    $   401,364    $    2,175,290     $      131,392         $    1,770,122    $   396,852    $    2,166,974     $      137,183
Less: Loss and loss adjustment expense                                 1,071,814         148,256        1,220,070          72,374                 1,118,957         171,073        1,290,030          77,314
Less: Ceding commission income                                         71,090            1,031          72,121             24,824                 87,827            6,519          94,346             35,380
Less: Service and fee income                                           222,588           160,592        383,180            3,493                  232,488           113,949        346,437            2,886
Less: Non-cash amortization of intangible assets                       9,228             2,617          11,845             60                     10,897            3,408          14,305             23
Operating expense before amortization and impairment (Non-GAAP)        399,206           88,868         488,074            30,641                 319,953           101,903        421,856            21,580
Net earned premium                                                     $    1,694,887    $   333,503    $    2,028,390     $      112,383         $    1,574,891    $   327,629    $    1,902,520     $      92,288
Operating expense ratio before amortization and impairment (Non-GAAP)  23.6           %  26.6        %  24.1           %   27.3           %       20.3           %  31.1        %  22.2           %   23.4           %

Premiums by Product Line

$ in thousands

(Unaudited)

                           Three Months Ended June 30,
                           Gross Written Premium                        Net Written Premium                        Net Earned Premium
                           2020            2019            Change       2020            2019          Change       2020            2019            Change
Property & Casualty
Personal Auto              $   612,927     $   611,312     0.3    %     $   533,242     $   511,952   4.2    %     $   561,548     $   542,834     3.4    %
Homeowners                 205,211         190,037         8.0    %     84,257          108,404       (22.3  )%    99,368          102,008         (2.6   )%
RV/Packaged                57,801          61,314          (5.7   )%    55,882          58,167        (3.9   )%    46,956          49,411          (5.0   )%
Small Business Auto        60,717          83,829          (27.6  )%    46,429          65,420        (29.0  )%    53,733          60,059          (10.5  )%
Lender-placed insurance    103,922         58,859          76.6   %     64,674          37,214        73.8   %     71,102          60,278          18.0   %
Other                      12,930          15,739          (17.8  )%    4,944           5,314         (7.0   )%    9,278           3,382           174.3  %
Total Premium              $   1,053,508   $   1,021,090   3.2    %     $   789,428     $   786,471   0.4    %     $   841,985     $   817,972     2.9    %
Accident & Health
Group                      89,467          75,036          19.2   %     69,217          57,960        19.4   %     69,232          57,949          19.5   %
Individual                 100,190         82,799          21.0   %     98,995          82,652        19.8   %     99,565          83,916          18.6   %
Total Premium Domestic     $   189,657     $   157,835     20.2   %     $   168,212     $   140,612   19.6   %     $   168,797     $   141,865     19.0   %
International              --              13,837          (100.0 )%    --              12,095        (100.0 )%    --              24,184          (100.0 )%
Total National General     $   1,243,165   $   1,192,762   4.2    %     $   957,640     $   939,178   2.0    %     $   1,010,782   $   984,021     2.7    %
Total National General (A) $   1,243,165   $   1,178,925   5.4    %     $   957,640     $   927,083   3.3    %     $   1,010,782   $   959,837     5.3    %
Reciprocal Exchanges
Personal Auto              $   37,382      $   43,984      (15.0  )%    $   34,281      $   18,661    83.7   %     $   31,714      $   16,093      97.1   %
Homeowners                 60,160          76,140          (21.0  )%    22,667          37,211        (39.1  )%    22,741          30,225          (24.8  )%
Other                      894             1,022           (12.5  )%    320             348           (8.0   )%    330             312             5.8    %
Total Premium              $   98,436      $   121,146     (18.7  )%    $   57,268      $   56,220    1.9    %     $   54,785      $   46,630      17.5   %
Consolidated Total         $   1,341,601   $   1,313,908   2.1    %     $   1,014,908   $   995,398   2.0    %     $   1,065,567   $   1,030,651   3.4    %

(A) Excludes A&H international product line which was sold in the fourth quarter of 2019.

Premiums by Product Line

$ in thousands

(Unaudited)

                           Six Months Ended June 30,
                           Gross Written Premium                        Net Written Premium                          Net Earned Premium
                           2020            2019            Change       2020            2019            Change       2020            2019            Change
Property & Casualty
Personal Auto              $   1,407,424   $   1,377,993   2.1    %     $   1,235,549   $   1,170,872   5.5    %     $   1,141,050   $   1,053,388   8.3    %
Homeowners                 370,464         342,079         8.3    %     172,800         193,649         (10.8  )%    190,851         186,066         2.6    %
RV/Packaged                110,929         113,165         (2.0   )%    107,860         109,764         (1.7   )%    96,248          99,716          (3.5   )%
Small Business Auto        133,469         169,707         (21.4  )%    105,028         139,606         (24.8  )%    113,158         127,692         (11.4  )%
Lender-placed insurance    199,366         134,797         47.9   %     142,143         79,284          79.3   %     140,769         101,996         38.0   %
Other                      29,532          29,014          1.8    %     12,140          8,824           37.6   %     12,811          6,033           112.3  %
Total Premium              $   2,251,184   $   2,166,755   3.9    %     $   1,775,520   $   1,701,999   4.3    %     $   1,694,887   $   1,574,891   7.6    %
Accident & Health
Group                      177,005         139,974         26.5   %     138,688         111,910         23.9   %     138,702         111,912         23.9   %
Individual                 199,677         166,991         19.6   %     197,740         166,775         18.6   %     194,801         166,151         17.2   %
Total Premium Domestic     $   376,682     $   306,965     22.7   %     $   336,428     $   278,685     20.7   %     $   333,503     $   278,063     19.9   %
International              --              123,251         (100.0 )%    --              74,203          (100.0 )%    --              49,566          (100.0 )%
Total National General     $   2,627,866   $   2,596,971   1.2    %     $   2,111,948   $   2,054,887   2.8    %     $   2,028,390   $   1,902,520   6.6    %
Total National General (A) $   2,627,866   $   2,473,720   6.2    %     $   2,111,948   $   1,980,684   6.6    %     $   2,028,390   $   1,852,954   9.5    %
Reciprocal Exchanges
Personal Auto              $   69,191      $   80,846      (14.4  )%    $   63,355      $   34,306      84.7   %     $   64,637      $   31,954      102.3  %
Homeowners                 119,396         143,940         (17.1  )%    48,592          70,227          (30.8  )%    47,074          59,716          (21.2  )%
Other                      1,702           1,929           (11.8  )%    616             642             (4.0   )%    672             618             8.7    %
Total Premium              $   190,289     $   226,715     (16.1  )%    $   112,563     $   105,175     7.0    %     $   112,383     $   92,288      21.8   %
Consolidated Total         $   2,818,155   $   2,823,686   (0.2   )%    $   2,224,511   $   2,160,062   3.0    %     $   2,140,773   $   1,994,808   7.3    %

(A) Excludes A&H international product line which was sold in the fourth quarter of 2019.

Fee Income

$ in thousands

(Unaudited)

                             Three Months Ended June 30,            Six Months Ended June 30,
                             2020          2019          Change     2020          2019          Change
Property & Casualty
Service and Fee Income       $   111,955   $   113,112   (1.0  )%   $   222,588   $   232,488   (4.3  )%
Ceding Commission Income     35,059        39,418        (11.1 )%   71,090        87,827        (19.1 )%
Property & Casualty          $   147,014   $   152,530   (3.6  )%   $   293,678   $   320,315   (8.3  )%
Accident & Health
Service and Fee Income
Group                        $   43,241    $   32,862    31.6  %    $   83,723    $   63,236    32.4  %
Individual                   2,265         1,242         82.4  %    4,482         3,378         32.7  %
Medicare Sales               11,078        5,159         114.7 %    22,790        12,260        85.9  %
Third Party Fee              23,484        13,674        71.7  %    49,597        35,075        41.4  %
Total Service and Fee Income 80,068        52,937        51.3  %    160,592       113,949       40.9  %
Ceding Commission Income     471           3,928         (88.0 )%   1,031         6,519         (84.2 )%
Accident and Health          $   80,539    $   56,865    41.6  %    $   161,623   $   120,468   34.2  %
Total National General       $   227,553   $   209,395   8.7   %    $   455,301   $   440,783   3.3   %
Reciprocal Exchanges
Service and Fee Income       $   2,336     $   1,516     54.1  %    $   3,493     $   2,886     21.0  %
Ceding Commission Income     11,110        16,846        (34.0 )%   24,824        35,380        (29.8 )%
Reciprocal Exchanges         $   13,446    $   18,362    (26.8 )%   $   28,317    $   38,266    (26.0 )%
Consolidated Total           $   227,232   $   209,100   8.7   %    $   456,978   $   444,141   2.9   %

NOTES: (A) Consolidated Total includes eliminations between National General and the Reciprocal Exchanges in Service and Fee Income of $(13,767) and $(18,657) in the three months ended June 30, 2020 and 2019, respectively, and $(26,640) and $(34,908) in the six months ended June 30, 2020 and 2019, 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 credit loss on investments in debt securities and foreign exchange gain or loss), 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, and any significant non-recurring or infrequent items that may not be indicative of ongoing operations. 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 financial measures to the most directly comparable GAAP measure.

(2) Total investments includes $235,458 and $238,841 from related parties at June 30, 2020 and December 31, 2019, respectively.

(3) Other includes $2,405 and $2,391 from related parties at June 30, 2020 and December 31, 2019, respectively.

(4) Preferred stock: $0.01 par value - authorized 10,000,000 shares, issued and outstanding 2,565,120 shares - June 30, 2020; authorized 10,000,000 shares, issued and outstanding 2,565,120 shares - December 31, 2019.

(5) Common stock: $0.01 par value - authorized 150,000,000 shares, issued 113,856,628 and outstanding 113,397,545 shares - June 30, 2020; authorized 150,000,000 shares, issued and outstanding 113,368,811 shares - December 31, 2019.

(6) Treasury stock, at cost: 459,083 shares - June 30, 2020.

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

(8) Operating expense ratio is a non-GAAP financial measure defined by the Company, which 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.

(9) Combined ratio is a non-GAAP financial measure defined by the Company, which 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. Management uses operating expense ratio (non-GAAP) and combined ratio (non-GAAP) to evaluate financial performance against historical results and establish targets. A combined ratio under 100% generally indicates an underwriting profit, while over 100% an underwriting loss.

(10) Operating expense ratio before amortization and impairment is a non-GAAP financial measure defined by the Company, which 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, service and fee income, 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. Management believes that this measure provides a more useful comparison to the operating expense ratio of other insurance companies involved in fewer acquisitions.

(11) Combined ratio before amortization and impairment is a non-GAAP financial measure defined by the Company, which 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. Management believes that this measure of underwriting profitability provides a more useful comparison to the combined ratio of other insurance companies involved in fewer acquisitions. A combined ratio under 100% generally indicates an underwriting profit, while over 100% an underwriting loss.

(12) Combined ratio (non-GAAP), operating expense ratio (non-GAAP), combined ratio before amortization and impairment (non-GAAP) and operating expense ratio before amortization and impairment (non-GAAP) are considered non-GAAP financial measures under applicable SEC rules. Other companies may calculate these ratios 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 financial measures to the most directly comparable GAAP measure.

(13) Trailing twelve month operating return on average equity is the ratio of the previous twelve months operating earnings (non-GAAP) to average shareholders' equity for the same twelve-month period. Average shareholders' equity is the sum of the shareholders' equity excluding preferred stock at the beginning and end of the period 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.

(14) Combined ratio excluding losses from various weather-related events, is calculated by taking the combined ratio as defined in Note 11, and adjusting it to exclude the total net losses of $35.3 million and $18.4 million from these events for the three months ended June 30, 2020 and 2019, respectively. The Company believes this measure enhances investors' understanding of our results by eliminating what we believe are volatile and unusual events.

Year                Combined Ratio  Impact of Weather-related Events  Combined Ratio Excluding Weather-related Events
2020  P&C Segment   83.6%           4.2%                              79.4%
2020  Overall NGHC  80.5%           3.5%                              77.0%
2019  P&C Segment   92.6%           2.2%                              90.4%
2019  Overall NGHC  90.9%           1.2%                              89.7%

(15) Our products in the P&C segment include personal auto, homeowners, RV/Packaged, small business auto, lender-placed insurance and other products. The personal auto product includes policies for standard, preferred and nonstandard automobile insurance. The homeowners product includes multiple-peril policies and personal umbrella coverage to the homeowner. The RV/Packaged product offers policies that include RV automatic personal effects coverage, optional replacement cost coverage, RV storage coverage and full-time liability coverage. The small business auto product offers policies that include liability and physical damage coverage for light-to-medium duty commercial vehicles. The lender-placed insurance product offers fire, home and flood products, as well as collateral protection insurance and guaranteed asset protection products for automobiles. Our products and revenue in the A&H segment include group, individual and third party fees. The group product includes revenue from our small group self-funded product. The individual product line includes revenue from our supplemental products including short-term medical, accident/AD&D, hospital indemnity, cancer/critical illness, dental and term life insurance. Medicare fees include commission and general agent fees for selling Medicare policies issued by third-party insurance companies as well as revenue from our Medicare Supplement product. Third party fees include commission and general agent fees for selling policies issued by third-party insurance companies, fees generated through selling our technology products to third parties.

Investor Contact

Clifford Gallant

SVP of Capital Strategy and Investor Relations

Phone: 212-380-9462

Email: Clifford.Gallant@NGIC.COM

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