James River Group Holdings, Ltd. ("James River" or the "Company")
(NASDAQ: JRVR) today reported the following results for the second
quarter 2024 as compared to the same period in 2023:
|
Three Months EndedJune 30, |
|
Three Months EndedJune 30, |
($ in thousands, except for share data) |
|
2024 |
|
|
per diluted share |
|
|
2023 |
|
per diluted share |
Net income from continuing operations available to common
shareholders |
$ |
11,853 |
|
|
$ |
0.31 |
|
|
$ |
9,504 |
|
$ |
0.25 |
Net (loss) income from discontinued operations |
|
(6,853 |
) |
|
$ |
(0.18 |
) |
|
|
3,785 |
|
$ |
0.10 |
Net income available to common shareholders |
|
5,000 |
|
|
$ |
0.13 |
|
|
|
13,289 |
|
$ |
0.35 |
Adjusted net operating income1 |
|
12,664 |
|
|
$ |
0.33 |
|
|
|
6,647 |
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company closed the sale of JRG Reinsurance
Company Ltd. ("JRG Re") on April 16, 2024. The full financials for
our former Casualty Reinsurance segment have been reclassified to
discontinued operations for all periods.
Net income from continuing operations available
to common shareholders was $11.9 million ($0.31 per diluted share).
Adjusted net operating income1 of $12.7 million ($0.33 per diluted
share) for the second quarter of 2024 reflected strong investment
income and profitable underwriting results from continuing
operations.
Unless specified otherwise, all underwriting
performance ratios presented herein are for our continuing
operations and business not subject to retroactive reinsurance
accounting for loss portfolio transfers ("LPTs").
Second Quarter 2024 Highlights:
- Group combined
ratio of 99.3% and adjusted net operating return on tangible common
equity1 of 14.9%.
- E&S segment
combined ratio of 95.4% and positive renewal rate change of 9.1%,
with the majority of the underwriting divisions reporting positive
pricing increases.
- Specialty
Admitted Insurance segment combined ratio of 85.0%, with fronting
and program gross written premium growth of 12.3% excluding the
non-renewed workers' compensation program.
- Net investment
income increased 36.7% compared to the prior year quarter, with all
asset classes reporting higher income.
- Shareholders'
equity per share of $14.32 increased 0.8%2 sequentially from March
31, 2024, due to strong net income from continuing operations,
while tangible common equity per share1 increased 0.2%2
sequentially.
Frank D'Orazio, the Company’s Chief Executive
Officer, commented on the second quarter, “James River has
continued to execute on its strategic priorities of de-risking the
organization and generating attractive returns on our capital.
E&S market conditions remain favorable amid accelerating
submission growth and a strong rate environment during the second
quarter as we continue to re-profile segments of our portfolio.
While we executed an attractive retroactive reinsurance transaction
last month, our Board of Directors continues its exploration of
strategic alternatives for the Company that was announced in
November of 2023.”
_____________________1 Adjusted net operating
income, tangible common equity per share and adjusted net operating
return on tangible common equity are non-GAAP financial measures.
See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP
Financial Measures” at the end of this press release.2 Percent
change before $0.05 common dividends paid per share during the
second quarter of 2024.
Second Quarter 2024 Operating
Results
- Gross written premium of $412.2
million, consisting of the following:
|
Three Months EndedJune 30, |
|
($ in thousands) |
|
2024 |
|
|
2023 |
|
% Change |
Excess and Surplus Lines |
$ |
292,836 |
|
$ |
286,126 |
|
2 |
% |
Specialty Admitted Insurance |
|
119,411 |
|
|
136,924 |
|
(13 |
)% |
|
$ |
412,247 |
|
$ |
423,050 |
|
(3 |
)% |
- Net written premium of $181.4 million,
consisting of the following:
|
Three Months EndedJune 30, |
|
($ in thousands) |
|
2024 |
|
|
2023 |
|
% Change |
Excess and Surplus Lines |
$ |
161,601 |
|
$ |
175,377 |
|
(8)% |
Specialty Admitted Insurance |
|
19,752 |
|
|
29,116 |
|
(32)% |
|
$ |
181,353 |
|
$ |
204,493 |
|
(11)% |
- Net earned premium of $163.2 million,
consisting of the following:
|
Three Months EndedJune 30, |
|
($ in thousands) |
|
2024 |
|
|
2023 |
|
% Change |
Excess and Surplus Lines |
$ |
140,447 |
|
$ |
149,611 |
|
(6)% |
Specialty Admitted Insurance |
|
22,746 |
|
|
23,858 |
|
(5)% |
|
$ |
163,193 |
|
$ |
173,469 |
|
(6)% |
- E&S Segment
Highlights:
- For the second
quarter of 2024, our casualty underwriting divisions grew 5.3%
compared to the prior year quarter, led by general casualty at
14.6%.
- Renewal rate
increases across the segment were 9.1% during the quarter.
- Amid moderating
rate increases, more readily available capacity and increased
competition, we are remaining selective in our excess property
portfolio, resulting in a gross written premium decline of 27.9% in
that line of business.
- Across the
E&S segment, gross written premium increased 2.3% compared to
the prior year quarter as most casualty underwriting divisions
reported stable growth rates and continued strong submission
flows.
- As mentioned
previously, premium retention in the segment was lower than the
prior year quarter due to the impact of a restructured casualty
reinsurance treaty put in place for the segment at mid year 2023,
driving the decline in net written premium.
- Specialty
Admitted Insurance Segment Highlights:
- Gross written
premium for fronting and program business increased 12.3% compared
to the prior year quarter excluding the impact of our large
workers' compensation program that was non-renewed during the
second quarter of 2023.
- Gross written
premium for the Specialty Admitted Insurance segment declined 12.8%
compared to the second quarter of 2023, with the reduction due to
the impact of the non-renewed workers' compensation program and the
sale of the renewal rights of the individual risk workers'
compensation business during the third quarter of 2023.
- Pre-tax
favorable (unfavorable) reserve development by segment on business
not subject to retroactive reinsurance accounting for loss
portfolio transfers was as follows:
|
Three Months EndedJune 30, |
($ in thousands) |
|
2024 |
|
|
|
2023 |
|
Excess and Surplus Lines |
$ |
(10,662 |
) |
|
$ |
(118 |
) |
Specialty Admitted Insurance |
|
4 |
|
|
|
839 |
|
|
$ |
(10,658 |
) |
|
$ |
721 |
|
-
The second quarter of 2024 reflected $10.7 million of unfavorable
reserve development in the E&S segment and minimal reserve
movements in the Specialty Admitted Insurance segment. Reserve
development in the E&S segment was primarily related to
accident years 2017-2020 for the general liability and excess
casualty lines of business. $9.7 million of the unfavorable reserve
development in the E&S segment is subject to the previously
disclosed combined loss portfolio transfer and adverse development
cover reinsurance transaction ("E&S LPT and ADC"). The E&S
LPT and ADC is effective January 1, 2024, but closed on July 2,
2024. As such, any applicable recoveries will be recognized in the
third quarter of 2024.
-
Additionally, the Company recognized unfavorable reserve
development of $1.4 million on the reserves subject to the
Commercial Auto LPT, which provides unlimited coverage. Retroactive
benefits of $5.1 million were recorded in loss and loss adjustment
expenses during the second quarter and the deferred retroactive
reinsurance gain on the Balance Sheet is $13.0 million as of June
30, 2024.
-
Gross fee income was as follows:
|
Three Months EndedJune 30, |
|
($ in thousands) |
|
2024 |
|
|
2023 |
|
% Change |
Specialty Admitted Insurance |
$ |
5,565 |
|
$ |
5,800 |
|
(4)% |
-
The consolidated expense ratio was 26.3% for the second quarter of
2024, which was an improvement from 28.2% in the prior year
quarter. The expense ratio benefited from favorable commission
expense adjustments in the Specialty Admitted Insurance
segment.
Investment Results
Net investment income for the second quarter of
2024 was $24.9 million, an increase of 36.7% compared to $18.2
million in the prior year quarter. Growth in income was broad-based
across the portfolio, as cash flow was deployed at higher yields.
On a sequential basis, income from private investments and all
other investments increased.
The Company’s net investment income consisted of
the following:
|
Three Months EndedJune 30, |
|
($ in thousands) |
|
2024 |
|
|
2023 |
|
% Change |
Private Investments |
|
1,909 |
|
|
232 |
|
723 |
% |
All Other Investments |
|
23,022 |
|
|
18,002 |
|
28 |
% |
Total Net Investment Income |
$ |
24,931 |
|
$ |
18,234 |
|
37 |
% |
|
|
|
|
|
|
|
|
|
The Company’s annualized gross investment yield
on average fixed maturity, bank loan and equity securities for the
three months ended June 30, 2024 was 5.0% (versus 4.3% for the
three months ended June 30, 2023). The investment yield increased
primarily as a result of higher market yields on fixed maturity
securities and bank loans.
Net realized and unrealized losses on
investments of $2.3 million for the three months ended June 30,
2024 compared to net realized and unrealized gains on investments
of $1.6 million in the prior year quarter. The majority of the
realized and unrealized losses during the second quarter of 2024
were related to sales in our fixed income portfolio and changes in
fair values of our common stock and bank loan portfolios.
In connection with the closing of the E&S
LPT and ADC, the Company transferred approximately $310.0 million
in cash for the payment of the premium to counterparty State
National Insurance Company, Inc.
Taxes
The Company's effective tax rate fluctuates from
period to period based on the relative mix of income reported by
country and the respective tax rates imposed by each tax
jurisdiction. The effective tax rate on income from continuing
operations for the six months ended June 30, 2024 was 28.5%.
Tangible Equity
Tangible equity3 of $485.3 million at
June 30, 2024 decreased 0.3% compared to tangible equity of
$486.6 million at March 31, 2024, as strong income from continuing
operations was partially offset by a loss from discontinued
operations and modest unrealized investment losses in accumulated
other comprehensive income ("AOCI"). AOCI declined by $2.4 million
during the second quarter of 2024 to a loss of $73.9 million, due
to a decrease in the value of the Company's fixed maturity
securities caused by an increase in interest rates. Excluding AOCI,
tangible common equity3 increased 0.2% sequentially.
_____________________3 Tangible equity and
tangible common equity excluding AOCI are non-GAAP financial
measures. See “Non-GAAP Financial Measures” and “Reconciliation of
Non-GAAP Financial Measures” at the end of this press release.
Capital Management
The Company announced that its Board of
Directors declared a cash dividend of $0.05 per common share. This
dividend is payable on Monday, September 30, 2024 to all
shareholders of record on Monday, September 16, 2024.
Other
As referenced previously, the E&S LPT and
ADC is effective January 1, 2024, but closed on July 2, 2024. As
such, any applicable recoveries will be recognized beginning in the
third quarter of 2024.
As a result of the E&S LPT and ADC, the
Company expects to recognize a reduction in pre-tax income of
approximately $44.0 million in the third quarter of 2024.
Conference Call
James River will hold a conference call to
discuss its second quarter results tomorrow, August 6, 2024 at 8:30
a.m. Eastern Time. Investors may access the conference call by
dialing (800) 715-9871, Conference ID 8370409, or via the internet
by visiting www.jrvrgroup.com and clicking on the “Investor
Relations” link. A webcast replay of the call will be available by
visiting the company website.
Forward-Looking Statements
This press release contains forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. In some cases, such forward-looking
statements may be identified by terms such as believe, expect,
seek, may, will, should, intend, project, anticipate, plan,
estimate, guidance or similar words. Forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements.
Although it is not possible to identify all of these risks and
uncertainties, they include, among others, the following: the
inherent uncertainty of estimating reserves and the possibility
that incurred losses may be greater than our loss and loss
adjustment expense reserves; inaccurate estimates and judgments in
our risk management may expose us to greater risks than intended;
downgrades in the financial strength rating of our regulated
insurance subsidiaries impacting our ability to attract and retain
insurance business that our subsidiaries write, our competitive
position, and our financial condition; uncertainty regarding the
outcome and timing of our exploration of strategic alternatives,
and the impacts that it may have on our business; the amount of the
final post-closing adjustment to the purchase price received in
connection with the sale of our casualty reinsurance business; the
potential loss of key members of our management team or key
employees and our ability to attract and retain personnel; adverse
economic factors resulting in the sale of fewer policies than
expected or an increase in the frequency or severity of claims, or
both; the impact of a persistently high inflationary environment on
our reserves, the values of our investments and investment returns,
and our compensation expenses; exposure to credit risk, interest
rate risk and other market risk in our investment portfolio;
reliance on a select group of brokers and agents for a significant
portion of our business and the impact of our potential failure to
maintain such relationships; reliance on a select group of
customers for a significant portion of our business and the impact
of our potential failure to maintain, or decision to terminate,
such relationships; our ability to obtain reinsurance coverage at
prices and on terms that allow us to transfer risk, adequately
protect our company against financial loss and that supports our
growth plans; losses resulting from reinsurance counterparties
failing to pay us on reinsurance claims, insurance companies with
whom we have a fronting arrangement failing to pay us for claims,
or a former customer with whom we have an indemnification
arrangement failing to perform its reimbursement obligations, and
our potential inability to demand or maintain adequate collateral
to mitigate such risks; inadequacy of premiums we charge to
compensate us for our losses incurred; changes in laws or
government regulation, including tax or insurance law and
regulations; changes in U.S. tax laws and the interpretation of
certain provisions of Public Law No. 115-97, informally titled the
2017 Tax Cuts and Jobs Act (including associated regulations),
which may be retroactive and could have a significant effect on us
including, among other things, by potentially increasing our tax
rate, as well as on our shareholders; in the event we do not
qualify for the insurance company exception to the passive foreign
investment company (“PFIC”) rules and are therefore considered a
PFIC, there could be material adverse tax consequences to an
investor that is subject to U.S. federal income taxation; the
Company or its foreign subsidiary becoming subject to U.S. federal
income taxation; a failure of any of the loss limitations or
exclusions we utilize to shield us from unanticipated financial
losses or legal exposures, or other liabilities; losses from
catastrophic events, such as natural disasters and terrorist acts,
which substantially exceed our expectations and/or exceed the
amount of reinsurance we have purchased to protect us from such
events; potential effects on our business of emerging claim and
coverage issues; the potential impact of internal or external
fraud, operational errors, systems malfunctions or cyber security
incidents; our ability to manage our growth effectively; failure to
maintain effective internal controls in accordance with the
Sarbanes-Oxley Act of 2002, as amended; changes in our financial
condition, regulations or other factors that may restrict our
subsidiaries’ ability to pay us dividends; and an adverse result in
any litigation or legal proceedings we are or may become subject
to. Additional information about these risks and uncertainties, as
well as others that may cause actual results to differ materially
from those in the forward-looking statements, is contained in our
filings with the U.S. Securities and Exchange Commission ("SEC"),
including our most recently filed Annual Report on Form 10-K and
Quarterly Report on 10-Q. These forward-looking statements speak
only as of the date of this release and the Company does not
undertake any obligation to update or revise any forward-looking
information to reflect changes in assumptions, the occurrence of
unanticipated events, or otherwise.
Non-GAAP Financial Measures
In presenting James River Group Holdings, Ltd.’s
results, management has included financial measures that are not
calculated under standards or rules that comprise accounting
principles generally accepted in the United States (“GAAP”). Such
measures, including underwriting profit (loss), adjusted net
operating income, tangible equity, tangible common equity, adjusted
net operating return on tangible equity (which is calculated as
annualized adjusted net operating income divided by the average
quarterly tangible equity balances in the respective period), and
adjusted net operating return on tangible common equity excluding
AOCI (which is calculated as annualized adjusted net operating
income divided by the average quarterly tangible common equity
balances in the respective period, excluding AOCI), are referred to
as non-GAAP measures. These non-GAAP measures may be defined or
calculated differently by other companies. These measures should
not be viewed as a substitute for those measures determined in
accordance with GAAP. Reconciliations of such measures to the most
comparable GAAP figures are included at the end of this press
release.
About James River Group Holdings,
Ltd.
James River Group Holdings, Ltd. is a
Bermuda-based insurance holding company that owns and operates a
group of specialty insurance companies. The Company operates in two
specialty property-casualty insurance segments: Excess and Surplus
Lines and Specialty Admitted Insurance. Each of the Company’s
regulated insurance subsidiaries are rated “A-” (Excellent) by A.M.
Best Company.
Visit James River Group Holdings, Ltd. on the
web at www.jrvrgroup.com
|
James River Group Holdings, Ltd. and
SubsidiariesCondensed Consolidated Balance Sheet
Data (Unaudited) |
|
($ in thousands, except for share data) |
June 30, 2024 |
|
December 31, 2023 |
ASSETS |
|
|
|
Invested assets: |
|
|
|
Fixed maturity securities, available-for-sale, at fair value |
$ |
1,114,475 |
|
$ |
1,324,476 |
Equity securities, at fair value |
|
128,564 |
|
|
119,945 |
Bank loan participations, at fair value |
|
165,280 |
|
|
156,169 |
Short-term investments |
|
45,977 |
|
|
72,137 |
Other invested assets |
|
35,834 |
|
|
33,134 |
Total invested assets |
|
1,490,130 |
|
|
1,705,861 |
|
|
|
|
Cash and cash equivalents |
|
672,523 |
|
|
274,298 |
Restricted cash equivalents (a) |
|
27,963 |
|
|
72,449 |
Accrued investment income |
|
9,850 |
|
|
12,106 |
Premiums receivable and agents’ balances, net |
|
248,995 |
|
|
249,490 |
Reinsurance recoverable on unpaid losses, net |
|
1,417,791 |
|
|
1,358,474 |
Reinsurance recoverable on paid losses |
|
160,555 |
|
|
157,991 |
Deferred policy acquisition costs |
|
27,150 |
|
|
31,497 |
Goodwill and intangible assets |
|
214,462 |
|
|
214,644 |
Other assets |
|
468,787 |
|
|
457,047 |
Assets of discontinued operations held-for-sale |
|
0 |
|
|
783,393 |
Total assets |
$ |
4,738,206 |
|
$ |
5,317,250 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Reserve for losses and loss adjustment expenses |
$ |
2,720,198 |
|
$ |
2,606,107 |
Unearned premiums |
|
600,603 |
|
|
587,899 |
Funds held (a) |
|
25,157 |
|
|
65,235 |
Deferred reinsurance gain |
|
13,047 |
|
|
20,733 |
Senior debt |
|
200,800 |
|
|
222,300 |
Junior subordinated debt |
|
104,055 |
|
|
104,055 |
Accrued expenses |
|
47,769 |
|
|
56,722 |
Other liabilities |
|
339,888 |
|
|
333,183 |
Liabilities of discontinued operations held-for-sale |
|
0 |
|
|
641,497 |
Total liabilities |
|
4,051,517 |
|
|
4,637,731 |
|
|
|
|
Series A redeemable preferred shares |
|
144,898 |
|
|
144,898 |
Total shareholders’ equity |
|
541,791 |
|
|
534,621 |
Total liabilities, Series A redeemable preferred shares, and
shareholders’ equity |
$ |
4,738,206 |
|
$ |
5,317,250 |
|
|
|
|
Tangible equity (b) |
$ |
485,274 |
|
$ |
485,608 |
Tangible equity per share (b) |
$ |
10.86 |
|
$ |
11.13 |
Tangible common equity per share (b) |
$ |
9.00 |
|
$ |
9.05 |
Shareholders' equity per share |
$ |
14.32 |
|
$ |
14.20 |
Common shares outstanding |
|
37,825,767 |
|
|
37,641,563 |
|
|
|
|
(a) Restricted cash equivalents and the funds held liability
includes funds posted by the Company to a trust account for the
benefit of a third party administrator handling the claims on the
Rasier commercial auto policies in run-off. Such funds held in
trust secure the Company's obligations to reimburse the
administrator for claims payments, and are primarily sourced from
the collateral posted to the Company by Rasier and its affiliates
to support their obligations under the indemnity agreements and the
loss portfolio transfer reinsurance agreement with the
Company. |
(b) See “Reconciliation of Non-GAAP Measures” |
|
|
|
|
James River Group Holdings, Ltd. and
SubsidiariesCondensed Consolidated Income
Statement Data (Unaudited) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
($ in thousands, except for share data) |
2024 |
|
2023 |
|
2024 |
|
2023 |
REVENUES |
|
|
|
|
|
|
|
Gross written premiums |
$ |
412,247 |
|
|
$ |
423,050 |
|
|
$ |
743,057 |
|
|
$ |
776,504 |
|
Net written premiums |
|
181,353 |
|
|
|
204,493 |
|
|
|
319,525 |
|
|
|
375,718 |
|
|
|
|
|
|
|
|
|
Net earned premiums |
|
163,193 |
|
|
|
173,469 |
|
|
|
334,884 |
|
|
|
342,379 |
|
Net investment income |
|
24,931 |
|
|
|
18,234 |
|
|
|
47,563 |
|
|
|
36,659 |
|
Net realized and unrealized (losses) gains on investments |
|
(2,305 |
) |
|
|
1,615 |
|
|
|
2,278 |
|
|
|
1,775 |
|
Other income |
|
2,470 |
|
|
|
1,464 |
|
|
|
4,691 |
|
|
|
2,773 |
|
Total revenues |
|
188,289 |
|
|
|
194,782 |
|
|
|
389,416 |
|
|
|
383,586 |
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
Losses and loss adjustment expenses (a) |
|
115,471 |
|
|
|
120,440 |
|
|
|
225,520 |
|
|
|
246,821 |
|
Other operating expenses |
|
44,096 |
|
|
|
50,193 |
|
|
|
94,906 |
|
|
|
98,229 |
|
Other expenses |
|
2,098 |
|
|
|
223 |
|
|
|
2,830 |
|
|
|
826 |
|
Interest expense |
|
6,344 |
|
|
|
5,997 |
|
|
|
12,829 |
|
|
|
11,580 |
|
Intangible asset amortization and impairment |
|
91 |
|
|
|
91 |
|
|
|
182 |
|
|
|
182 |
|
Total expenses |
|
168,100 |
|
|
|
176,944 |
|
|
|
336,267 |
|
|
|
357,638 |
|
Income from continuing operations before income taxes |
|
20,189 |
|
|
|
17,838 |
|
|
|
53,149 |
|
|
|
25,948 |
|
Income tax expense on continuing operations |
|
5,711 |
|
|
|
5,709 |
|
|
|
15,163 |
|
|
|
8,517 |
|
Net income from continuing operations |
|
14,478 |
|
|
|
12,129 |
|
|
|
37,986 |
|
|
|
17,431 |
|
Net (loss) income from discontinued operations |
|
(6,853 |
) |
|
|
3,785 |
|
|
|
(14,958 |
) |
|
|
5,489 |
|
NET INCOME |
|
7,625 |
|
|
|
15,914 |
|
|
|
23,028 |
|
|
|
22,920 |
|
Dividends on Series A preferred shares |
|
(2,625 |
) |
|
|
(2,625 |
) |
|
|
(5,250 |
) |
|
|
(5,250 |
) |
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ |
5,000 |
|
|
$ |
13,289 |
|
|
$ |
17,778 |
|
|
$ |
17,670 |
|
ADJUSTED NET OPERATING INCOME (b) |
$ |
12,664 |
|
|
$ |
6,647 |
|
|
$ |
27,496 |
|
|
$ |
19,016 |
|
|
|
|
|
|
|
|
|
INCOME (LOSS) PER COMMON SHARE |
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.31 |
|
|
$ |
0.25 |
|
|
$ |
0.87 |
|
|
$ |
0.32 |
|
Discontinued operations |
$ |
(0.18 |
) |
|
$ |
0.10 |
|
|
$ |
(0.40 |
) |
|
$ |
0.15 |
|
|
$ |
0.13 |
|
|
$ |
0.35 |
|
|
$ |
0.47 |
|
|
$ |
0.47 |
|
Diluted (c) |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.31 |
|
|
$ |
0.25 |
|
|
$ |
0.85 |
|
|
$ |
0.32 |
|
Discontinued operations |
$ |
(0.18 |
) |
|
$ |
0.10 |
|
|
$ |
(0.33 |
) |
|
$ |
0.15 |
|
|
$ |
0.13 |
|
|
$ |
0.35 |
|
|
$ |
0.52 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
ADJUSTED NET OPERATING INCOME PER COMMON
SHARE |
|
|
|
|
Basic |
$ |
0.33 |
|
|
$ |
0.18 |
|
|
$ |
0.73 |
|
|
$ |
0.51 |
|
Diluted |
$ |
0.33 |
|
|
$ |
0.18 |
|
|
$ |
0.72 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
37,869,322 |
|
|
|
37,642,289 |
|
|
|
37,801,516 |
|
|
|
37,587,359 |
|
Diluted |
|
38,037,393 |
|
|
|
37,858,747 |
|
|
|
44,762,563 |
|
|
|
37,822,405 |
|
Cash dividends declared per common share |
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
Loss ratio |
|
73.0 |
% |
|
|
70.7 |
% |
|
|
69.6 |
% |
|
|
69.3 |
% |
Expense ratio (d) |
|
26.3 |
% |
|
|
28.2 |
% |
|
|
27.6 |
% |
|
|
28.0 |
% |
Combined ratio |
|
99.3 |
% |
|
|
98.9 |
% |
|
|
97.2 |
% |
|
|
97.3 |
% |
Accident year loss ratio (e) |
|
66.0 |
% |
|
|
67.5 |
% |
|
|
66.3 |
% |
|
|
67.3 |
% |
|
|
|
|
|
|
|
|
(a) Losses and loss adjustment expenses include benefits of $3.7
million and $7.7 million for deferred retroactive reinsurance gains
for the three and six months ended June 30, 2024, respectively
($2.3 million of benefit and $9.4 million of expense in the
respective prior year periods). |
(b) See "Reconciliation of Non-GAAP Measures". |
(c) The outstanding Series A preferred shares were dilutive for the
six months ended June 30, 2024. Dividends on the Series A
preferred shares were added back to the numerator in the
calculation and 6,799,665 common shares from an assumed conversion
of the Series A preferred shares were included in the denominator
for the six month calculation. |
(d) Calculated with a numerator comprising other operating expenses
less gross fee income (in specific instances when the Company is
not retaining insurance risk) included in “Other income” in our
Condensed Consolidated Income Statements of $1.3 million and $2.6
million for the three and six months ended June 30, 2024,
respectively ($1.3 million and $2.4 million in the respective prior
year periods). |
(e) Ratio of losses and loss adjustment expenses for the current
accident year, excluding development on prior accident year
reserves, to net earned premiums for the current year (excluding
net earned premium adjustments on certain reinsurance treaties with
reinstatement premiums associated with prior years). |
|
|
James River Group Holdings, Ltd. and
SubsidiariesSegment Results |
|
|
|
EXCESS
AND SURPLUS LINES |
|
|
|
|
Three Months EndedJune 30, |
|
|
|
Six Months EndedJune 30, |
|
|
|
($ in thousands) |
2024 |
|
2023 |
|
%Change |
|
2024 |
|
2023 |
|
% Change |
|
Gross written premiums |
$ |
292,836 |
|
|
$ |
286,126 |
|
|
2.3 |
% |
|
$ |
506,527 |
|
|
$ |
515,029 |
|
|
(1.7 |
)% |
Net written premiums |
$ |
161,601 |
|
|
$ |
175,377 |
|
|
(7.9 |
)% |
|
$ |
279,026 |
|
|
$ |
319,877 |
|
|
(12.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premiums |
$ |
140,447 |
|
|
$ |
149,611 |
|
|
(6.1 |
)% |
|
$ |
286,070 |
|
|
$ |
298,040 |
|
|
(4.0 |
)% |
Losses and loss adjustment expenses excluding retroactive
reinsurance |
|
(101,533 |
) |
|
|
(105,098 |
) |
|
(3.4 |
)% |
|
|
(195,138 |
) |
|
|
(204,287 |
) |
|
(4.5 |
)% |
Underwriting expenses |
|
(32,487 |
) |
|
|
(34,471 |
) |
|
(5.8 |
)% |
|
|
(66,014 |
) |
|
|
(66,646 |
) |
|
(0.9 |
)% |
Underwriting profit (a) |
$ |
6,427 |
|
|
$ |
10,042 |
|
|
(36.0 |
)% |
|
$ |
24,918 |
|
|
$ |
27,107 |
|
|
(8.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
|
72.3 |
% |
|
|
70.2 |
% |
|
|
|
|
68.2 |
% |
|
|
68.5 |
% |
|
|
|
Expense ratio |
|
23.1 |
% |
|
|
23.1 |
% |
|
|
|
|
23.1 |
% |
|
|
22.4 |
% |
|
|
|
Combined ratio |
|
95.4 |
% |
|
|
93.3 |
% |
|
|
|
|
91.3 |
% |
|
|
90.9 |
% |
|
|
|
Accident year loss ratio (b) |
|
64.2 |
% |
|
|
66.0 |
% |
|
|
|
|
64.2 |
% |
|
|
65.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See "Reconciliation of Non-GAAP Measures". |
|
(b) Ratio of losses and loss adjustment expenses for the current
accident year, excluding development on prior accident year
reserves, to net earned premiums for the current year (excluding
net earned premium adjustments on certain reinsurance treaties with
reinstatement premiums associated with prior years). |
|
SPECIALTY
ADMITTED INSURANCE |
|
|
Three Months EndedJune 30, |
|
|
|
Six Months EndedJune 30, |
|
|
($ in thousands) |
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
Gross written premiums |
$ |
119,411 |
|
|
$ |
136,924 |
|
|
(12.8 |
)% |
|
$ |
236,530 |
|
|
$ |
261,475 |
|
|
(9.5 |
)% |
Net written premiums |
$ |
19,752 |
|
|
$ |
29,116 |
|
|
(32.2 |
)% |
|
$ |
40,499 |
|
|
$ |
55,841 |
|
|
(27.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premiums |
$ |
22,746 |
|
|
$ |
23,858 |
|
|
(4.7 |
)% |
|
$ |
48,814 |
|
|
$ |
44,339 |
|
|
10.1 |
% |
Losses and loss adjustment expenses |
|
(17,622 |
) |
|
|
(17,594 |
) |
|
0.2 |
% |
|
|
(38,068 |
) |
|
|
(33,086 |
) |
|
15.1 |
% |
Underwriting expenses |
|
(1,708 |
) |
|
|
(5,880 |
) |
|
(71.0 |
)% |
|
|
(6,544 |
) |
|
|
(11,338 |
) |
|
(42.3 |
)% |
Underwriting profit (loss) (a), (b) |
$ |
3,416 |
|
|
$ |
384 |
|
|
789.6 |
% |
|
$ |
4,202 |
|
|
$ |
(85 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
|
77.5 |
% |
|
|
73.7 |
% |
|
|
|
|
78.0 |
% |
|
|
74.6 |
% |
|
|
Expense ratio |
|
7.5 |
% |
|
|
24.7 |
% |
|
|
|
|
13.4 |
% |
|
|
25.6 |
% |
|
|
Combined ratio |
|
85.0 |
% |
|
|
98.4 |
% |
|
|
|
|
91.4 |
% |
|
|
100.2 |
% |
|
|
Accident year loss ratio |
|
77.5 |
% |
|
|
77.3 |
% |
|
|
|
|
78.9 |
% |
|
|
76.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See "Reconciliation of Non-GAAP Measures". |
(b) Underwriting results for the three and six months ended
June 30, 2024 include gross fee income of $5.6 million and
$10.9 million, respectively ($5.8 million and $11.5 million in the
respective prior year periods). |
|
Underwriting Performance
Ratios
The following table provides the underwriting
performance ratios of the Company's continuing operations inclusive
of the business subject to retroactive reinsurance accounting for a
loss portfolio transfer. There is no economic impact to the Company
over the life of a loss portfolio transfer contract so long as any
additional losses subject to the contract are within the limit of
the loss portfolio transfer and the counterparty performs under the
contract. Retroactive reinsurance accounting is not indicative of
our current and ongoing operations. Management believes that
providing loss ratios and combined ratios on business not subject
to retroactive reinsurance accounting for loss portfolio transfers
gives the users of our financial statements useful information in
evaluating our current and ongoing operations.
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Excess and Surplus Lines: |
|
|
|
|
|
|
|
Loss Ratio |
72.3 |
% |
|
70.2 |
% |
|
68.2 |
% |
|
68.5 |
% |
Impact of retroactive reinsurance |
(2.6 |
)% |
|
(1.5 |
)% |
|
(2.7 |
)% |
|
3.2 |
% |
Loss Ratio including impact of retroactive reinsurance |
69.7 |
% |
|
68.7 |
% |
|
65.5 |
% |
|
71.7 |
% |
|
|
|
|
|
|
|
|
Combined Ratio |
95.4 |
% |
|
93.3 |
% |
|
91.3 |
% |
|
90.9 |
% |
Impact of retroactive reinsurance |
(2.6 |
)% |
|
(1.5 |
)% |
|
(2.7 |
)% |
|
3.2 |
% |
Combined Ratio including impact of retroactive reinsurance |
92.8 |
% |
|
91.8 |
% |
|
88.6 |
% |
|
94.1 |
% |
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
Loss Ratio |
73.0 |
% |
|
70.7 |
% |
|
69.6 |
% |
|
69.3 |
% |
Impact of retroactive reinsurance |
(2.3 |
)% |
|
(1.3 |
)% |
|
(2.3 |
)% |
|
2.8 |
% |
Loss Ratio including impact of retroactive reinsurance |
70.7 |
% |
|
69.4 |
% |
|
67.3 |
% |
|
72.1 |
% |
|
|
|
|
|
|
|
|
Combined Ratio |
99.3 |
% |
|
98.9 |
% |
|
97.2 |
% |
|
97.3 |
% |
Impact of retroactive reinsurance |
(2.3 |
)% |
|
(1.3 |
)% |
|
(2.3 |
)% |
|
2.8 |
% |
Combined Ratio including impact of retroactive reinsurance |
97.0 |
% |
|
97.6 |
% |
|
94.9 |
% |
|
100.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP
MEASURES
Underwriting Profit
The following table reconciles the underwriting
profit by individual operating segment and for the entire Company
to consolidated income from continuing operations before taxes. We
believe that the disclosure of underwriting profit by individual
segment and of the Company as a whole is useful to investors,
analysts, rating agencies and other users of our financial
information in evaluating our performance because our objective is
to consistently earn underwriting profits. We evaluate the
performance of our segments and allocate resources based primarily
on underwriting profit. We define underwriting profit as net earned
premiums and gross fee income (in specific instances when the
Company is not retaining insurance risk) less losses and loss
adjustment expenses on business from continuing operations not
subject to retroactive reinsurance accounting for loss portfolio
transfers and other operating expenses. Other operating expenses
include the underwriting, acquisition, and insurance expenses of
the operating segments and, for consolidated underwriting profit,
the expenses of the Corporate and Other segment. Our definition of
underwriting profit may not be comparable to that of other
companies.
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
($ in thousands) |
2024 |
|
2023 |
|
2024 |
|
2023 |
Underwriting profit (loss) of
the operating segments: |
|
|
|
|
|
|
|
Excess and Surplus Lines |
$ |
6,427 |
|
|
$ |
10,042 |
|
|
$ |
24,918 |
|
|
$ |
27,107 |
|
Specialty Admitted Insurance |
|
3,416 |
|
|
|
384 |
|
|
|
4,202 |
|
|
|
(85 |
) |
Total underwriting profit of operating segments |
|
9,843 |
|
|
|
10,426 |
|
|
|
29,120 |
|
|
|
27,022 |
|
Other operating expenses of the Corporate and Other segment |
|
(8,624 |
) |
|
|
(8,548 |
) |
|
|
(19,761 |
) |
|
|
(17,830 |
) |
Underwriting profit (a) |
|
1,219 |
|
|
|
1,878 |
|
|
|
9,359 |
|
|
|
9,192 |
|
Losses and loss adjustment expenses - retroactive reinsurance |
|
3,684 |
|
|
|
2,252 |
|
|
|
7,686 |
|
|
|
(9,448 |
) |
Net investment income |
|
24,931 |
|
|
|
18,234 |
|
|
|
47,563 |
|
|
|
36,659 |
|
Net realized and unrealized (losses) gains on investments |
|
(2,305 |
) |
|
|
1,615 |
|
|
|
2,278 |
|
|
|
1,775 |
|
Other income (expense) |
|
(905 |
) |
|
|
(53 |
) |
|
|
(726 |
) |
|
|
(468 |
) |
Interest expense |
|
(6,344 |
) |
|
|
(5,997 |
) |
|
|
(12,829 |
) |
|
|
(11,580 |
) |
Amortization of intangible assets |
|
(91 |
) |
|
|
(91 |
) |
|
|
(182 |
) |
|
|
(182 |
) |
Income from continuing operations before taxes |
$ |
20,189 |
|
|
$ |
17,838 |
|
|
$ |
53,149 |
|
|
$ |
25,948 |
|
|
|
|
|
|
|
|
|
(a) Included in underwriting results for the three and six months
ended June 30, 2024 is gross fee income of $5.6 million and
$10.9 million, respectively ($5.8 million and $11.5 million in the
respective prior year periods). |
|
Adjusted Net Operating
Income
We define adjusted net operating income as
income available to common shareholders excluding a) income (loss)
from discontinued operations b) the impact of retroactive
reinsurance accounting for a loss portfolio transfer, c) net
realized and unrealized gains (losses) on investments, d) certain
non-operating expenses such as professional service fees related to
various strategic initiatives, and the filing of registration
statements for the offering of securities, and e) severance costs
associated with terminated employees. We use adjusted net operating
income as an internal performance measure in the management of our
operations because we believe it gives our management and other
users of our financial information useful insight into our results
of operations and our underlying business performance. Adjusted net
operating income should not be viewed as a substitute for net
income calculated in accordance with GAAP, and our definition of
adjusted net operating income may not be comparable to that of
other companies.
Our income available to common shareholders
reconciles to our adjusted net operating income as follows:
|
Three Months Ended June 30, |
|
2024 |
|
2023 |
($ in thousands) |
IncomeBeforeTaxes |
|
NetIncome |
|
IncomeBeforeTaxes |
|
NetIncome |
Income available to common shareholders |
$ |
10,711 |
|
|
$ |
5,000 |
|
|
$ |
18,998 |
|
|
$ |
13,289 |
|
Loss (income) from discontinued operations |
|
6,853 |
|
|
|
6,853 |
|
|
|
(3,785 |
) |
|
|
(3,785 |
) |
Losses and loss adjustment expenses - retroactive reinsurance |
|
(3,684 |
) |
|
|
(2,910 |
) |
|
|
(2,252 |
) |
|
|
(1,779 |
) |
Net realized and unrealized investment losses (gains) |
|
2,305 |
|
|
|
1,821 |
|
|
|
(1,615 |
) |
|
|
(1,276 |
) |
Other expenses |
|
2,098 |
|
|
|
1,900 |
|
|
|
223 |
|
|
|
198 |
|
Adjusted net operating income |
$ |
18,283 |
|
|
$ |
12,664 |
|
|
$ |
11,569 |
|
|
$ |
6,647 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2024 |
|
2023 |
($ in thousands) |
IncomeBeforeTaxes |
|
NetIncome |
|
IncomeBeforeTaxes |
|
NetIncome |
Income available to common shareholders |
$ |
32,941 |
|
|
$ |
17,778 |
|
|
$ |
26,187 |
|
|
$ |
17,670 |
|
Loss (income) from discontinued operations |
|
14,958 |
|
|
|
14,958 |
|
|
|
(5,489 |
) |
|
|
(5,489 |
) |
Losses and loss adjustment expenses - retroactive reinsurance |
|
(7,686 |
) |
|
|
(6,072 |
) |
|
|
9,448 |
|
|
|
7,464 |
|
Net realized and unrealized investment gains |
|
(2,278 |
) |
|
|
(1,800 |
) |
|
|
(1,775 |
) |
|
|
(1,402 |
) |
Other expenses |
|
2,830 |
|
|
|
2,632 |
|
|
|
798 |
|
|
|
773 |
|
Adjusted net operating income |
$ |
40,765 |
|
|
$ |
27,496 |
|
|
$ |
29,169 |
|
|
$ |
19,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Equity (per Share) and Tangible
Common Equity (per Share)
We define tangible equity as shareholders'
equity plus mezzanine Series A preferred shares and the
unrecognized deferred retroactive reinsurance gain on loss
portfolio transfers less goodwill and intangible assets (net of
amortization). We define tangible common equity as tangible equity
less mezzanine Series A preferred shares. Our definition of
tangible equity and tangible common equity may not be comparable to
that of other companies, and it should not be viewed as a
substitute for shareholders’ equity calculated in accordance with
GAAP. We use tangible equity and tangible common equity internally
to evaluate the strength of our balance sheet and to compare
returns relative to this measure. The following table reconciles
shareholders’ equity to tangible equity and tangible common equity
for June 30, 2024, March 31, 2024, December 31, 2023, and
June 30, 2023.
|
June 30, 2024 |
|
March 31, 2024 |
|
December 31, 2023 |
|
June 30, 2023 |
($ in thousands, except for share data) |
|
|
|
|
|
|
|
Shareholders' equity |
$ |
541,791 |
|
$ |
539,537 |
|
$ |
534,621 |
|
$ |
585,542 |
Plus: Series A redeemable preferred shares |
|
144,898 |
|
|
144,898 |
|
|
144,898 |
|
|
144,898 |
Plus: Deferred reinsurance gain (a) |
|
13,047 |
|
|
16,731 |
|
|
20,733 |
|
|
37,572 |
Less: Goodwill and intangible assets |
|
214,462 |
|
|
214,553 |
|
|
214,644 |
|
|
217,325 |
Tangible equity |
$ |
485,274 |
|
$ |
486,613 |
|
$ |
485,608 |
|
$ |
550,687 |
Less: Series A redeemable preferred shares |
|
144,898 |
|
|
144,898 |
|
|
144,898 |
|
|
144,898 |
Tangible common equity |
$ |
340,376 |
|
$ |
341,715 |
|
$ |
340,710 |
|
$ |
405,789 |
|
|
|
|
|
|
|
|
Common shares outstanding |
|
37,825,767 |
|
|
37,822,340 |
|
|
37,641,563 |
|
|
37,619,226 |
Common shares from assumed conversion of Series A preferred
shares |
|
6,848,763 |
|
|
6,750,567 |
|
|
5,971,184 |
|
|
5,640,158 |
Common shares outstanding after assumed conversion of Series A
preferred shares |
|
44,674,530 |
|
|
44,572,907 |
|
|
43,612,747 |
|
|
43,259,384 |
|
|
|
|
|
|
|
|
Equity per share: |
|
|
|
|
|
|
|
Shareholders' equity |
$ |
14.32 |
|
$ |
14.27 |
|
$ |
14.20 |
|
$ |
15.56 |
Tangible equity |
$ |
10.86 |
|
$ |
10.92 |
|
$ |
11.13 |
|
$ |
12.73 |
Tangible common equity |
$ |
9.00 |
|
$ |
9.03 |
|
$ |
9.05 |
|
$ |
10.79 |
|
|
|
|
|
|
|
|
(a) Deferred reinsurance gain for the periods ending March 31, 2024
and December 31, 2023 excludes the deferred retroactive reinsurance
gain of $34.0 million and $33.2 million, respectively, related to
the former Casualty Reinsurance LPT in discontinued
operations. |
For more information contact:
Zachary Shytle
Analyst, Finance, Investments and Investor Relations
Investors@jrvrgroup.com
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