James River Announces Third Quarter 2024 Results, Strategic Actions
James River Group Holdings (NASDAQ: JRVR) reported a net loss from continuing operations of $40.7 million ($1.07 per diluted share) in Q3 2024, compared to net income of $21.1 million in Q3 2023. The loss was primarily due to a $52.2 million excess consideration paid for E&S combined loss portfolio transfer and $19.2 million of additional adverse development. The E&S segment showed 6% premium growth with 8.6% renewal rate increase. The company announced strategic partnerships with Enstar Group, including a $12.5 million investment at $6.40 per share, and amended convertible preferred shares with Gallatin Point Capital. The company plans to redomicile to the United States in 2025.
James River Group Holdings (NASDAQ: JRVR) ha riportato una perdita netta dalle operazioni continuative di 40,7 milioni di dollari (1,07 dollari per azione diluita) nel terzo trimestre del 2024, rispetto a un reddito netto di 21,1 milioni di dollari nel terzo trimestre del 2023. La perdita è stata principalmente attribuita a un eccesso di considerazione di 52,2 milioni di dollari pagato per il trasferimento del portafoglio di perdite combinate E&S e a 19,2 milioni di dollari di ulteriori sviluppi negativi. Il segmento E&S ha mostrato una crescita dei premi del 6% con un aumento del tasso di rinnovo dell'8,6%. L'azienda ha annunciato alleanze strategiche con Enstar Group, incluso un investimento di 12,5 milioni di dollari a 6,40 dollari per azione, e l'emissione di azioni privilegiate convertibili con Gallatin Point Capital. L'azienda prevede di ricollocarsi negli Stati Uniti nel 2025.
James River Group Holdings (NASDAQ: JRVR) reportó una pérdida neta de operaciones continuas de 40,7 millones de dólares (1,07 dólares por acción diluida) en el tercer trimestre de 2024, en comparación con un ingreso neto de 21,1 millones de dólares en el tercer trimestre de 2023. La pérdida se debió principalmente a un exceso de consideración de 52,2 millones de dólares pagado por la transferencia del portafolio de pérdidas combinadas E&S y 19,2 millones de dólares de desarrollo adverso adicional. El segmento de E&S mostró un crecimiento de primas del 6% con un aumento de la tasa de renovación del 8,6%. La compañía anunció asociaciones estratégicas con Enstar Group, incluida una inversión de 12,5 millones de dólares a 6,40 dólares por acción, y la modificación de acciones preferentes convertibles con Gallatin Point Capital. La empresa planea reubicarse en Estados Unidos en 2025.
제임스 리버 그룹 홀딩스 (NASDAQ: JRVR)는 2024년 3분기에 4,070만 달러 (희석 주당 1.07 달러)의 지속 운영으로 인한 순 손실을 보고했으며, 이는 2023년 3분기에 2,110만 달러의 순이익과 비교됩니다. 이번 손실은 주로 E&S 결합 손실 포트폴리오 이전에 대해 지급된 5,220만 달러의 초과 고려와 1,920만 달러의 추가적인 불리한 개발로 인한 것이었습니다. E&S 부문은 6%의 보험료 성장과 8.6%의 갱신율 증가를 보였습니다. 회사는 Enstar Group과의 전략적 파트너십을 발표했으며, 이에는 주당 6.40달러로 1,250만 달러의 투자가 포함되어 있고, Gallatin Point Capital과 변환 가능한 우선주를 수정했습니다. 회사는 2025년에 미국으로 이전할 계획입니다.
James River Group Holdings (NASDAQ: JRVR) a rapporté une perte nette d'exploitation continue de 40,7 millions de dollars (1,07 dollar par action diluée) au troisième trimestre de 2024, contre un bénéfice net de 21,1 millions de dollars au troisième trimestre de 2023. La perte était principalement due à un excès de considération de 52,2 millions de dollars payé pour le transfert du portefeuille de pertes combinées E&S et à 19,2 millions de dollars de développements défavorables supplémentaires. Le segment E&S a enregistré une croissance des primes de 6 % avec une augmentation du taux de renouvellement de 8,6 %. L'entreprise a annoncé des partenariats stratégiques avec le groupe Enstar, y compris un investissement de 12,5 millions de dollars à 6,40 dollars par action, et a modifié des actions préférentielles convertibles avec Gallatin Point Capital. L'entreprise prévoit de se redomicilier aux États-Unis en 2025.
James River Group Holdings (NASDAQ: JRVR) meldete im dritten Quartal 2024 einen Nettoverlust aus fortgeführten Operationen von 40,7 Millionen US-Dollar (1,07 US-Dollar pro verwässerter Aktie) im Vergleich zu einem Nettogewinn von 21,1 Millionen US-Dollar im dritten Quartal 2023. Der Verlust war hauptsächlich auf eine überhöhte Vergütung von 52,2 Millionen US-Dollar zurückzuführen, die für den Transfer des kombinierten Verlustportfolios von E&S gezahlt wurde, sowie auf zusätzliche negative Entwicklungen in Höhe von 19,2 Millionen US-Dollar. Das Segment E&S wies ein Prämienwachstum von 6 % und eine Erneuerungsrate von 8,6 % auf. Das Unternehmen kündigte strategische Partnerschaften mit der Enstar Group an, einschließlich einer Investition von 12,5 Millionen US-Dollar zu einem Preis von 6,40 US-Dollar pro Aktie, und änderte die konvertierbaren Vorzugsaktien mit Gallatin Point Capital. Das Unternehmen plant, sich 2025 in die Vereinigten Staaten umzuwandeln.
- E&S segment gross written premium growth of 6% with 8.6% renewal rate increase
- Net investment income increased 8.1% to $23.6 million
- Specialty Admitted Insurance segment achieved 91.3% combined ratio
- Fronting and program gross written premium growth of 8.7% (excluding non-renewed workers' compensation)
- Strategic partnership with Enstar including $12.5 million investment
- Net loss of $40.7 million compared to $21.1 million profit in prior year
- $52.2 million excess consideration paid for E&S combined loss portfolio transfer
- $19.2 million additional adverse development ceded to E&S ADC
- E&S segment reported high 136.1% combined ratio
- Shareholders' equity per share decreased 2.1% sequentially
Insights
The E&S segment showed
The Specialty Admitted segment remains profitable with a
PEMBROKE, Bermuda, Nov. 11, 2024 (GLOBE NEWSWIRE) -- James River Group Holdings, Ltd. ("James River" or the "Company") (NASDAQ: JRVR) today reported the following results for the third quarter 2024 as compared to the same period in 20231:
| Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
| ($ in thousands, except for share data) | 2024 | per diluted share | 2023 | per diluted share | |||||||||||
| Net (loss) income from continuing operations available to common shareholders | $ | (40,702 | ) | $ | (1.07 | ) | $ | 21,097 | $ | 0.55 | |||||
| Net loss from discontinued operations | (1,304 | ) | $ | (0.03 | ) | (4,171 | ) | $ | (0.10 | ) | |||||
| Net (loss) income available to common shareholders | (42,006 | ) | $ | (1.10 | ) | 16,926 | $ | 0.45 | |||||||
| Adjusted net operating (loss) income2 | (28,196 | ) | $ | (0.74 | ) | 18,859 | $ | 0.49 | |||||||
Net loss from continuing operations available to common shareholders was
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").
Third Quarter 2024 Highlights:
- E&S segment gross written premium growth was
6% and positive renewal rate change of8.6% . While the segment reported a136.1% combined ratio, the current accident year combined ratio for the segment was92.6% . - Specialty Admitted Insurance segment combined ratio of
91.3% , with fronting and program gross written premium growth of8.7% excluding the non-renewed workers' compensation programs. - Net investment income increased
8.1% compared to the prior year quarter, with all asset classes reporting higher income. - Shareholders' equity per share of
$14.02 decreased2.1% sequentially from June 30, 2024, due to the net loss from continuing operations, while tangible common equity per share3 increased1.9% sequentially.
Strategic Actions:
- The Company is commencing a multi-pronged strategic partnership with Enstar Group Limited ("Enstar"), a leader in P&C industry risk and liability management, under which:
- Cavello Bay Reinsurance Limited (“Cavello Bay”), a wholly owned subsidiary of Enstar, has agreed to purchase
$12.5 million of newly issued common shares at a per share price of$6.40 (subject to certain closing conditions), in addition to 637,640 common shares it already owns through purchases in the open market; and - Subsidiaries of the Company have entered into an adverse development reinsurance agreement with Cavello Bay, directly above the existing E&S ADC, with a limit of
$75 million and no co-participation4; and - Enstar will also have an informal consulting relationship and best practices dialogue with the Company’s claims leadership.
- Cavello Bay Reinsurance Limited (“Cavello Bay”), a wholly owned subsidiary of Enstar, has agreed to purchase
- The Company amended the convertible preferred shares held by Gallatin Point Capital LLC ("Gallatin Point") to convert
$37.5 million liquidation preference of the outstanding preferred shares to common shares at a per share price of$6.40 . The quarterly preferred dividend of the remaining$112.5 million liquidation preference will remain at7% for five years subsequent to September 30, 2024 and will be capped at8% thereafter. In addition, the voluntary and mandatory conversion prices of the remaining$112.5 million of outstanding preferred shares were amended to increase the conversion premiums to130% and200% of the new conversion price of$6.40 per share, respectively. - Through these actions, alongside the reduction to the Company's quarterly common dividend, the Company will meaningfully reduce its fixed charges given the opportunity it has to put capital to work at attractive returns, in its E&S segment especially.
- The Company intends to pursue a plan to redomicile to the United States during 2025 and expects to reduce its effective tax rate closer to the US statutory rate thereafter.
- See the 2024 Strategic Actions Frequently Asked Questions slides being made available on the Investor Relations page of our website simultaneously with this press release for further information on these Strategic Actions. With these announcements, the Board of Directors have concluded the strategic review process announced in November of 2023. While the strategic review process has been completed, in the ordinary course of business the Company expects to consider beneficial opportunities.
_______________
1 The Company closed the sale of JRG Reinsurance Company Ltd. on April 16, 2024. The full financials for our former Casualty Reinsurance segment have been classified to discontinued operations for all periods.
2 Adjusted net operating (loss) 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.
3 Percent change before
4 The Enstar transactions are subject to closing conditions, including receipt by Cavello Bay of regulatory approval of the adverse development cover.
Frank D'Orazio, the Company’s Chief Executive Officer, commented on the third quarter, “With the strategic actions we are announcing - notably the addition of Enstar as both a significant shareholder and strategic partner and the continued commitment of Gallatin Point - our highly regarded E&S franchise is significantly de-risked and well positioned to take advantage of strong market support amid a robust E&S environment. Momentum in our Core E&S franchise has continued to build each quarter during 2024 as we continue to balance attractive market conditions with underwriting discipline.”
David Ni, Chief Strategy Officer of Enstar Group, commented, “In conjunction with these transactions, Enstar has had the opportunity to become well-versed with the Company’s business and we are pleased to make a
Matthew Botein, Co-Founder and Managing Partner of Gallatin Point Capital, commented, “I have seen the team at James River make deep and meaningful improvements to the Company over the last several years. These transactions are the culmination of those efforts and Gallatin Point is very supportive of James River as it enters a new phase, where it is poised to capitalize on the market opportunity for its flagship E&S operation.”
Third Quarter 2024 Operating Results
- Gross written premium of
$330.4 million , consisting of the following:
| Three Months Ended September 30, | |||||||||||
| ($ in thousands) | 2024 | 2023 | % Change | ||||||||
| Excess and Surplus Lines | $ | 230,215 | $ | 217,151 | 6 | % | |||||
| Specialty Admitted Insurance | 100,208 | 125,700 | (20 | )% | |||||||
| $ | 330,423 | $ | 342,851 | (4 | |||||||
- Net written premium of
$147.3 million , consisting of the following:
| Three Months Ended September 30, | |||||||||||
| ($ in thousands) | 2024 | 2023 | % Change | ||||||||
| Excess and Surplus Lines | $ | 129,735 | $ | 123,046 | 5 | % | |||||
| Specialty Admitted Insurance | 17,603 | 22,936 | (23 | )% | |||||||
| $ | 147,338 | $ | 145,982 | 1 | % | ||||||
- Net earned premium of
$159.7 million , consisting of the following:
| Three Months Ended September 30, | |||||||||||
| ($ in thousands) | 2024 | 2023 | % Change | ||||||||
| Excess and Surplus Lines | $ | 138,892 | $ | 157,600 | (12 | )% | |||||
| Specialty Admitted Insurance | 20,834 | 26,073 | (20 | )% | |||||||
| $ | 159,726 | $ | 183,673 | (13 | )% | ||||||
- E&S Segment Highlights:
- For the third quarter of 2024, the segment grew
6% , and its casualty underwriting divisions grew6.7% as compared to the prior year quarter. - Renewal rate increases across the segment were
8.6% during the quarter. - The segment experienced its strongest submission growth in over four years, with double digit growth in both new and renewal submissions.
- For the third quarter of 2024, the segment grew
- Specialty Admitted Insurance Segment Highlights:
- Gross written premium for fronting and program business increased
8.7% compared to the prior year quarter, excluding the impact of our large workers’ compensation program and Individual Risk Workers’ Compensation book. - Gross written premium for the Specialty Admitted Insurance segment declined
20.3% compared to the third quarter of 2023, with the reduction due to the impact of the non-renewed workers' compensation program during the second quarter of 2023 and the sale of the renewal rights of the individual risk workers’ compensation business during the third quarter of 2023.
- Gross written premium for fronting and program business increased
- 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 Ended September 30, | |||||||
| ($ in thousands) | 2024 | 2023 | |||||
| Excess and Surplus Lines | $ | (57,041 | ) | $ | (7,809 | ) | |
| Specialty Admitted Insurance | 165 | — | |||||
| $ | (56,876 | ) | $ | (7,809 | ) | ||
- The third quarter of 2024 reflected
$57.0 million of net unfavorable reserve development in the E&S segment and$0.2 million of favorable reserve development in the Specialty Admitted Insurance segment. The Company ceded$71.4 million of year-to-date unfavorable reserve development on business subject to the E&S ADC. This consists of a$52.2 million reserve charge upon execution of the E&S ADC equal to the excess consideration paid over reserves ceded and additional adverse development of$19.2 million that was ceded to the E&S ADC. The deferred retroactive reinsurance gain on the balance sheet associated with the E&S ADC is$19.2 million as of September 30, 2024. Additionally, the Company recognized unfavorable gross reserve development of$0.9 million ($0.0 net) on the reserves subject to the Commercial Auto LPT, which provides unlimited coverage. - Retroactive benefits of
$2.2 million were recorded in loss and loss adjustment expenses during the third quarter and the total deferred retroactive reinsurance gain on the Balance Sheet is$31.0 million as of September 30, 2024. - Gross fee income was as follows:
| Three Months Ended September 30, | |||||||||||
| ($ in thousands) | 2024 | 2023 | % Change | ||||||||
| Specialty Admitted Insurance | $ | 5,239 | $ | 6,833 | (23 | )% | |||||
- The consolidated expense ratio was
31.4% for the third quarter of 2024, which was an increase from26.4% in the prior year quarter. The expense ratio increase was primarily driven by higher compensation and bad debt expense, and lower net earned premium in the E&S segment.
Investment Results
Net investment income for the third quarter of 2024 was
The Company’s net investment income consisted of the following:
| Three Months Ended September 30, | |||||||||||
| ($ in thousands) | 2024 | 2023 | % Change | ||||||||
| Private Investments | 1,757 | 27 | NM | ||||||||
| All Other Investments | 21,807 | 21,772 | 0 | % | |||||||
| Total Net Investment Income | $ | 23,564 | $ | 21,799 | 8 | % | |||||
The Company’s annualized gross investment yield on average fixed maturity, bank loan and equity securities for the three months ended September 30, 2024 was
Net realized and unrealized gains on investments of
In connection with the closing of the E&S ADC on July 2, the Company transferred approximately
Capital Management
The Company announced that its Board of Directors declared a cash dividend of
Tangible Equity
Tangible equity5 of
_______________
5 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.
Conference Call
James River will hold a conference call to discuss its third quarter results tomorrow, November 12, 2024 at 8:30 a.m. Eastern Time. Investors may access the conference call by dialing (800) 715-9871, Conference ID 6261499, 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 or outlook 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; the outcome of our exploration of strategic alternatives, and market reaction thereto; the failure to close the common equity and adverse development cover reinsurance transactions with Enstar Group Limited announced on November 11, 2024; the amount of the final post-closing adjustment to the purchase price received in connection with the sale of our casualty reinsurance business and outcome of litigation relating to such transactions; 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 higher than expected 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 insurance and 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 Form 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 (loss) profit, adjusted net operating (loss) 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 Subsidiaries Condensed Consolidated Balance Sheet Data (Unaudited) | |||||||
| ($ in thousands, except for share data) | September 30, 2024 | December 31, 2023 | |||||
| ASSETS | |||||||
| Invested assets: | |||||||
| Fixed maturity securities, available-for-sale, at fair value | $ | 1,215,244 | $ | 1,324,476 | |||
| Equity securities, at fair value | 131,187 | 119,945 | |||||
| Bank loan participations, at fair value | 149,113 | 156,169 | |||||
| Short-term investments | 43,588 | 72,137 | |||||
| Other invested assets | 35,932 | 33,134 | |||||
| Total invested assets | 1,575,064 | 1,705,861 | |||||
| Cash and cash equivalents | 359,773 | 274,298 | |||||
| Restricted cash equivalents (a) | 28,364 | 72,449 | |||||
| Accrued investment income | 10,248 | 12,106 | |||||
| Premiums receivable and agents’ balances, net | 202,575 | 249,490 | |||||
| Reinsurance recoverable on unpaid losses, net | 1,939,388 | 1,358,474 | |||||
| Reinsurance recoverable on paid losses | 133,257 | 157,991 | |||||
| Deferred policy acquisition costs | 27,279 | 31,497 | |||||
| Goodwill and intangible assets | 214,372 | 214,644 | |||||
| Other assets | 468,411 | 457,047 | |||||
| Assets of discontinued operations held-for-sale | 0 | 783,393 | |||||
| Total assets | $ | 4,958,731 | $ | 5,317,250 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Reserve for losses and loss adjustment expenses | $ | 3,001,913 | $ | 2,606,107 | |||
| Unearned premiums | 577,074 | 587,899 | |||||
| Funds held (a) | 25,157 | 65,235 | |||||
| Deferred reinsurance gain | 31,001 | 20,733 | |||||
| Senior debt | 200,800 | 222,300 | |||||
| Junior subordinated debt | 104,055 | 104,055 | |||||
| Accrued expenses | 51,991 | 56,722 | |||||
| Other liabilities | 291,495 | 333,183 | |||||
| Liabilities of discontinued operations held-for-sale | 0 | 641,497 | |||||
| Total liabilities | 4,283,486 | 4,637,731 | |||||
| Series A redeemable preferred shares | 144,898 | 144,898 | |||||
| Total shareholders’ equity | 530,347 | 534,621 | |||||
| Total liabilities, Series A redeemable preferred shares, and shareholders’ equity | $ | 4,958,731 | $ | 5,317,250 | |||
| Tangible equity (b) | $ | 491,874 | $ | 485,608 | |||
| Tangible equity per share (b) | $ | 11.01 | $ | 11.13 | |||
| Tangible common equity per share (b) | $ | 9.17 | $ | 9.05 | |||
| Shareholders' equity per share | $ | 14.02 | $ | 14.20 | |||
| Common shares outstanding | 37,829,475 | 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 Subsidiaries Condensed Consolidated Income Statement Data (Unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| ($ in thousands, except for share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| REVENUES | |||||||||||||||
| Gross written premiums | $ | 330,423 | $ | 342,851 | $ | 1,073,480 | $ | 1,119,355 | |||||||
| Net written premiums | 147,338 | 145,982 | 466,863 | 521,700 | |||||||||||
| Net earned premiums | 159,726 | 183,673 | 494,610 | 526,052 | |||||||||||
| Net investment income | 23,564 | 21,799 | 71,127 | 58,458 | |||||||||||
| Net realized and unrealized gains on investments | 4,150 | 712 | 6,428 | 2,487 | |||||||||||
| Other income | 4,057 | 4,135 | 8,748 | 6,908 | |||||||||||
| Total revenues | 191,497 | 210,319 | 580,913 | 593,905 | |||||||||||
| EXPENSES | |||||||||||||||
| Losses and loss adjustment expenses (a) | 184,294 | 120,174 | 409,814 | 366,995 | |||||||||||
| Other operating expenses | 51,224 | 49,693 | 146,130 | 147,922 | |||||||||||
| Other expenses | 1,752 | 641 | 4,582 | 1,467 | |||||||||||
| Interest expense | 6,128 | 6,486 | 18,957 | 18,066 | |||||||||||
| Intangible asset amortization and impairment | 90 | 2,590 | 272 | 2,772 | |||||||||||
| Total expenses | 243,488 | 179,584 | 579,755 | 537,222 | |||||||||||
| (Loss) income from continuing operations before income taxes | (51,991 | ) | 30,735 | 1,158 | 56,683 | ||||||||||
| Income tax (benefit) expense on continuing operations | (13,914 | ) | 7,013 | 1,249 | 15,530 | ||||||||||
| Net (loss) income from continuing operations | $ | (38,077 | ) | $ | 23,722 | (91 | ) | 41,153 | |||||||
| Net (loss) income from discontinued operations | (1,304 | ) | (4,171 | ) | (16,262 | ) | 1,318 | ||||||||
| NET (LOSS) INCOME | (39,381 | ) | 19,551 | (16,353 | ) | 42,471 | |||||||||
| Dividends on Series A preferred shares | (2,625 | ) | (2,625 | ) | (7,875 | ) | (7,875 | ) | |||||||
| NET (LOSS) INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | (42,006 | ) | $ | 16,926 | $ | (24,228 | ) | $ | 34,596 | |||||
| ADJUSTED NET OPERATING (LOSS) INCOME (b) | $ | (28,196 | ) | $ | 18,859 | $ | (700 | ) | $ | 37,875 | |||||
| INCOME (LOSS) PER COMMON SHARE | |||||||||||||||
| Basic | |||||||||||||||
| Continuing operations | $ | (1.07 | ) | $ | 0.56 | $ | (0.21 | ) | $ | 0.88 | |||||
| Discontinued operations | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.43 | ) | $ | 0.04 | ||||
| $ | (1.10 | ) | $ | 0.45 | $ | (0.64 | ) | $ | 0.92 | ||||||
| Diluted | |||||||||||||||
| Continuing operations | $ | (1.07 | ) | $ | 0.55 | $ | (0.21 | ) | $ | 0.88 | |||||
| Discontinued operations | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.43 | ) | $ | 0.03 | ||||
| $ | (1.10 | ) | $ | 0.45 | $ | (0.64 | ) | $ | 0.91 | ||||||
| ADJUSTED NET OPERATING (LOSS) INCOME PER COMMON SHARE | |||||||||||||||
| Basic | $ | (0.74 | ) | $ | 0.50 | $ | (0.02 | ) | $ | 1.01 | |||||
| Diluted (c) | $ | (0.74 | ) | $ | 0.49 | $ | (0.02 | ) | $ | 1.00 | |||||
| Weighted-average common shares outstanding: | |||||||||||||||
| Basic | 37,880,297 | 37,642,632 | 37,827,968 | 37,605,986 | |||||||||||
| Diluted | 37,880,297 | 43,463,064 | 37,827,968 | 37,822,774 | |||||||||||
| Cash dividends declared per common share | $ | 0.05 | $ | 0.05 | $ | 0.15 | $ | 0.15 | |||||||
| Ratios: | |||||||||||||||
| Loss ratio | 104.1 | % | 67.2 | % | 80.8 | % | 68.6 | % | |||||||
| Expense ratio (d) | 31.4 | % | 26.4 | % | 28.8 | % | 27.4 | % | |||||||
| Combined ratio | 135.5 | % | 93.6 | % | 109.6 | % | 96.0 | % | |||||||
| Accident year loss ratio (e) | 66.4 | % | 62.9 | % | 66.3 | % | 65.8 | % | |||||||
| (a) Losses and loss adjustment expenses include expenses of | |||||||||||||||
| (b) See "Reconciliation of Non-GAAP Measures". | |||||||||||||||
| (c) For the three months ended September 30, 2023, the outstanding Series A preferred shares were dilutive. Dividends on the Series A preferred shares were added back to the numerator of the calculation and 5,640,158 common shares from an assumed conversion of the Series A preferred shares were included in the denominator. | |||||||||||||||
| (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 | |||||||||||||||
| (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 Subsidiaries Segment Results | |||||||||||||||
EXCESS AND SURPLUS LINES
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| ($ in thousands) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||
| Gross written premiums | $ | 230,215 | $ | 217,151 | 6.0 | % | $ | 736,742 | $ | 732,180 | 0.6 | % | |||||||||||
| Net written premiums | $ | 129,735 | $ | 123,046 | 5.4 | % | $ | 408,761 | $ | 442,923 | (7.7 | )% | |||||||||||
| Net earned premiums | $ | 138,892 | $ | 157,600 | (11.9 | )% | $ | 424,962 | $ | 455,640 | (6.7 | )% | |||||||||||
| Losses and loss adjustment expenses excluding retroactive reinsurance | (150,249 | ) | (103,077 | ) | 45.8 | % | (345,387 | ) | (307,364 | ) | 12.4 | % | |||||||||||
| Underwriting expenses | (38,798 | ) | (36,181 | ) | 7.2 | % | (104,812 | ) | (102,827 | ) | 1.9 | % | |||||||||||
| Underwriting (loss) profit (a) | $ | (50,155 | ) | $ | 18,342 | — | $ | (25,237 | ) | $ | 45,449 | — | |||||||||||
| Ratios: | |||||||||||||||||||||||
| Loss ratio | 108.2 | % | 65.4 | % | 81.3 | % | 67.5 | % | |||||||||||||||
| Expense ratio | 27.9 | % | 23.0 | % | 24.6 | % | 22.5 | % | |||||||||||||||
| Combined ratio | 136.1 | % | 88.4 | % | 105.9 | % | 90.0 | % | |||||||||||||||
| Accident year loss ratio (b) | 64.7 | % | 60.4 | % | 64.4 | % | 64.1 | % | |||||||||||||||
| (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 Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| ($ in thousands) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||
| Gross written premiums | $ | 100,208 | $ | 125,700 | (20.3 | )% | $ | 336,738 | $ | 387,175 | (13.0 | )% | |||||||||||
| Net written premiums | $ | 17,603 | $ | 22,936 | (23.3 | )% | $ | 58,102 | $ | 78,777 | (26.2 | )% | |||||||||||
| Net earned premiums | $ | 20,834 | $ | 26,073 | (20.1 | )% | $ | 69,648 | $ | 70,412 | (1.1 | )% | |||||||||||
| Losses and loss adjustment expenses | (16,091 | ) | (20,284 | ) | (20.7 | )% | (54,159 | ) | (53,370 | ) | 1.5 | % | |||||||||||
| Underwriting expenses | (2,933 | ) | (3,822 | ) | (23.3 | )% | (9,477 | ) | (15,160 | ) | (37.5 | )% | |||||||||||
| Underwriting profit (a), (b) | $ | 1,810 | $ | 1,967 | (8.0 | )% | $ | 6,012 | $ | 1,882 | 219.4 | % | |||||||||||
| Ratios: | |||||||||||||||||||||||
| Loss ratio | 77.2 | % | 77.8 | % | 77.8 | % | 75.8 | % | |||||||||||||||
| Expense ratio | 14.1 | % | 14.7 | % | 13.6 | % | 21.5 | % | |||||||||||||||
| Combined ratio | 91.3 | % | 92.5 | % | 91.4 | % | 97.3 | % | |||||||||||||||
| Accident year loss ratio | 78.0 | % | 77.8 | % | 78.6 | % | 77.2 | % | |||||||||||||||
| (a) See "Reconciliation of Non-GAAP Measures". | |||||||||||||||||||||||
| (b) Underwriting results for the three and nine months ended September 30, 2024 include gross fee income of | |||||||||||||||||||||||
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 loss portfolio transfers. 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 Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Excess and Surplus Lines: | |||||||||||||||
| Loss Ratio | 108.2 | % | 65.4 | % | 81.3 | % | 67.5 | % | |||||||
| Impact of retroactive reinsurance | 12.9 | % | (2.0 | )% | 2.4 | % | 1.4 | % | |||||||
| Loss Ratio including impact of retroactive reinsurance | 121.1 | % | 63.4 | % | 83.7 | % | 68.9 | % | |||||||
| Combined Ratio | 136.1 | % | 88.4 | % | 105.9 | % | 90.0 | % | |||||||
| Impact of retroactive reinsurance | 12.9 | % | (2.0 | )% | 2.4 | % | 1.4 | % | |||||||
| Combined Ratio including impact of retroactive reinsurance | 149.0 | % | 86.4 | % | 108.3 | % | 91.4 | % | |||||||
| Consolidated: | |||||||||||||||
| Loss Ratio | 104.1 | % | 67.2 | % | 80.8 | % | 68.6 | % | |||||||
| Impact of retroactive reinsurance | 11.2 | % | (1.7 | )% | 2.1 | % | 1.2 | % | |||||||
| Loss Ratio including impact of retroactive reinsurance | 115.3 | % | 65.5 | % | 82.9 | % | 69.8 | % | |||||||
| Combined Ratio | 135.5 | % | 93.6 | % | 109.6 | % | 96.0 | % | |||||||
| Impact of retroactive reinsurance | 11.2 | % | (1.7 | )% | 2.1 | % | 1.2 | % | |||||||
| Combined Ratio including impact of retroactive reinsurance | 146.7 | % | 91.9 | % | 111.7 | % | 97.2 | % | |||||||
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 Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Underwriting (loss) profit of the operating segments: | |||||||||||||||
| Excess and Surplus Lines | $ | (50,155 | ) | $ | 18,342 | $ | (25,237 | ) | $ | 45,449 | |||||
| Specialty Admitted Insurance | 1,810 | 1,967 | 6,012 | 1,882 | |||||||||||
| Total underwriting profit of operating segments | (48,345 | ) | 20,309 | (19,225 | ) | 47,331 | |||||||||
| Other operating expenses of the Corporate and Other segment | (8,421 | ) | (8,482 | ) | (28,182 | ) | (26,312 | ) | |||||||
| Underwriting (loss) profit (a) | (56,766 | ) | 11,827 | (47,407 | ) | 21,019 | |||||||||
| Losses and loss adjustment expenses - retroactive reinsurance | (17,954 | ) | 3,187 | (10,268 | ) | (6,261 | ) | ||||||||
| Net investment income | 23,564 | 21,799 | 71,127 | 58,458 | |||||||||||
| Net realized and unrealized gains on investments | 4,150 | 712 | 6,428 | 2,487 | |||||||||||
| Other income (expense) | 1,233 | 2,286 | 507 | 1,818 | |||||||||||
| Interest expense | (6,128 | ) | (6,486 | ) | (18,957 | ) | (18,066 | ) | |||||||
| Amortization of intangible assets | (90 | ) | (90 | ) | (272 | ) | (272 | ) | |||||||
| Impairment of IRWC trademark intangible asset | — | (2,500 | ) | — | (2,500 | ) | |||||||||
| (Loss) income from continuing operations before taxes | $ | (51,991 | ) | $ | 30,735 | $ | 1,158 | $ | 56,683 | ||||||
| (a) Included in underwriting results for the three and nine months ended September 30, 2024 is gross fee income of | |||||||||||||||
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 loss portfolio transfers, 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 (loss) income available to common shareholders reconciles to our adjusted net operating (loss) income as follows:
| Three Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | ||||||||||||||
| ($ in thousands) | Loss Before Taxes | Net Loss | Income Before Taxes | Net Income | |||||||||||
| (Loss) income available to common shareholders | $ | (55,920 | ) | $ | (42,006 | ) | $ | 23,939 | $ | 16,926 | |||||
| Loss from discontinued operations | 1,304 | 1,304 | 4,171 | 4,171 | |||||||||||
| Losses and loss adjustment expenses - retroactive reinsurance | 17,954 | 14,184 | (3,187 | ) | (2,518 | ) | |||||||||
| Net realized and unrealized investment gains | (4,150 | ) | (3,279 | ) | (712 | ) | (562 | ) | |||||||
| Other expenses | 1,752 | 1,601 | (1,531 | ) | (1,133 | ) | |||||||||
| Impairment of IRWC trademark intangible asset | — | — | 2,500 | 1,975 | |||||||||||
| Adjusted net operating (loss) income | $ | (39,060 | ) | $ | (28,196 | ) | $ | 25,180 | $ | 18,859 | |||||
| Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | ||||||||||||||
| ($ in thousands) | (Loss) Income Before Taxes | Net Loss | Income Before Taxes | Net Income | |||||||||||
| (Loss) income available to common shareholders | $ | (22,979 | ) | $ | (24,228 | ) | $ | 50,126 | $ | 34,596 | |||||
| Loss (income) from discontinued operations | 16,262 | 16,262 | (1,318 | ) | (1,318 | ) | |||||||||
| Losses and loss adjustment expenses - retroactive reinsurance | 10,268 | 8,112 | 6,261 | 4,946 | |||||||||||
| Net realized and unrealized investment gains | (6,428 | ) | (5,079 | ) | (2,487 | ) | (1,964 | ) | |||||||
| Other expenses | 4,582 | 4,233 | (733 | ) | (360 | ) | |||||||||
| Impairment of IRWC trademark intangible asset | — | — | 2,500 | 1,975 | |||||||||||
| Adjusted net operating income (loss) | $ | 1,705 | $ | (700 | ) | $ | 54,349 | $ | 37,875 | ||||||
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 September 30, 2024, June 30, 2024, December 31, 2023, and September 30, 2023.
| September 30, 2024 | June 30, 2024 | December 31, 2023 | September 30, 2023 | ||||||||||||
| ($ in thousands, except for share data) | |||||||||||||||
| Shareholders' equity | $ | 530,347 | $ | 541,791 | $ | 534,621 | $ | 562,544 | |||||||
| Plus: Series A redeemable preferred shares | 144,898 | 144,898 | 144,898 | 144,898 | |||||||||||
| Plus: Deferred reinsurance gain (a) | 31,001 | 13,047 | 20,733 | 37,653 | |||||||||||
| Less: Goodwill and intangible assets | 214,372 | 214,462 | 214,644 | 214,735 | |||||||||||
| Tangible equity | $ | 491,874 | $ | 485,274 | $ | 485,608 | $ | 530,360 | |||||||
| Less: Series A redeemable preferred shares | 144,898 | 144,898 | 144,898 | 144,898 | |||||||||||
| Tangible common equity | $ | 346,976 | $ | 340,376 | $ | 340,710 | $ | 385,462 | |||||||
| Common shares outstanding | 37,829,475 | 37,825,767 | 37,641,563 | 37,619,749 | |||||||||||
| Common shares from assumed conversion of Series A preferred shares | 6,848,763 | 6,848,763 | 5,971,184 | 5,640,158 | |||||||||||
| Common shares outstanding after assumed conversion of Series A preferred shares | 44,678,238 | 44,674,530 | 43,612,747 | 43,259,907 | |||||||||||
| Equity per share: | |||||||||||||||
| Shareholders' equity | $ | 14.02 | $ | 14.32 | $ | 14.20 | $ | 14.95 | |||||||
| Tangible equity | $ | 11.01 | $ | 10.86 | $ | 11.13 | $ | 12.26 | |||||||
| Tangible common equity | $ | 9.17 | $ | 9.00 | $ | 9.05 | $ | 10.25 | |||||||
| (a) Deferred reinsurance gain for the period ending September 30, 2023 includes the deferred retroactive reinsurance gain of | |||||||||||||||
FAQ
What was James River's (JRVR) net loss in Q3 2024?
What was JRVR's E&S segment performance in Q3 2024?
How much is Enstar investing in James River (JRVR)?
When does James River (JRVR) plan to redomicile to the United States?
