James River Group Holdings, Ltd. ("James River" or the "Company")
(NASDAQ: JRVR) today reported second quarter 2023 net income
available to common shareholders of $21.1 million ($0.54 per
diluted share), compared to net income available to common
shareholders of $5.0 million ($0.13 per diluted share) for the
second quarter of 2022. Adjusted net operating income1 for the
second quarter of 2023 was $20.6 million ($0.53 per diluted share),
compared to adjusted net operating income1 of $20.0 million ($0.52
per diluted share) for the second quarter of 2022.
Second Quarter 2023 Highlights:
- Group combined ratio of 94.6% and
Excess and Surplus Lines ("E&S") segment combined ratio of
87.8% on business not subject to retroactive reinsurance accounting
for loss portfolio transfers (the "combined ratio"). Unless
specified otherwise, all underwriting performance ratios presented
herein are for our business not subject to retroactive reinsurance
accounting for loss portfolio transfers ("LPTs").
- Core E&S (excluding commercial
auto) gross written premium growth of 9.0% compared to the prior
year quarter, and E&S segment gross written and net earned
premium growth of 7.3% and 15.3% compared to the prior year
quarter, respectively, due to strong growth from our larger
underwriting divisions, broad based renewal rate increases and
increased net retention in excess casualty. Fronting and Program
gross written premium growth of 11.0% compared to the prior year
quarter.
- E&S segment renewal rate change
increased 11.0% from the prior year quarter, with nearly all
underwriting divisions reporting positive pricing increases.
- Net investment income increased
71.2% compared to the prior year quarter, with most asset classes
reporting meaningfully higher income.
- Shareholders' equity per share of
$15.84 increased 1.1%2 sequentially from March 31, 2023. Tangible
common equity per share1 excluding accumulated other comprehensive
loss ("AOCI") increased 4.4%2 sequentially and 15.9%2 from the
prior year quarter.
- Adjusted net operating return on
tangible common equity excluding AOCI1 of 14.8% for the second
quarter and 15.5% for the six months ended June 30, 2023.
________________________1 Adjusted net operating
income, tangible common equity per share, and adjusted net
operating return on 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.2 Percent change before common dividends paid.
Frank D'Orazio, the Company’s Chief Executive
Officer, commented on the second quarter, “Our results continue to
demonstrate our focus on generating strong, consistent earnings for
shareholders and an ability to take advantage of sustained robust
E&S market conditions, while managing our portfolio for optimal
risk and return. Rising E&S renewal rates of 11% in the second
quarter provide encouraging signs of persistent market strength in
our core business.”
Second Quarter 2023 Operating
Results
- Gross written premium of $427.7 million, consisting of the
following:
|
Three Months EndedJune 30, |
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
Excess and Surplus Lines |
$ |
286,126 |
|
$ |
266,635 |
|
7 |
% |
Specialty Admitted
Insurance |
|
136,924 |
|
|
124,967 |
|
10 |
% |
Casualty Reinsurance |
|
4,691 |
|
|
8,112 |
|
(42 |
)% |
|
$ |
427,741 |
|
$ |
399,714 |
|
7 |
% |
|
- Net written premium of $218.2 million, consisting of the
following:
|
Three Months EndedJune 30, |
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
Excess and Surplus Lines |
$ |
184,768 |
|
$ |
166,004 |
|
11 |
% |
Specialty Admitted
Insurance |
|
29,116 |
|
|
18,390 |
|
58 |
% |
Casualty Reinsurance |
|
4,295 |
|
|
10,297 |
|
(58 |
)% |
|
$ |
218,179 |
|
$ |
194,691 |
|
12 |
% |
|
- Net earned premium of $209.7 million, consisting of the
following:
|
Three Months EndedJune 30, |
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
Excess and Surplus Lines |
$ |
159,002 |
|
$ |
137,884 |
|
15 |
% |
Specialty Admitted
Insurance |
|
23,858 |
|
|
18,141 |
|
32 |
% |
Casualty Reinsurance |
|
26,798 |
|
|
30,237 |
|
(11 |
)% |
|
$ |
209,658 |
|
$ |
186,262 |
|
13 |
% |
|
- Core E&S (excluding commercial
auto) gross written premium grew 9.0%, while the E&S segment
gross written premium increased 7.3% compared to the prior year
quarter. Net earned premium increased 15.3% due to strong growth in
most of our underwriting divisions and higher net retention within
our excess casualty unit. Premium growth for the segment was led by
our larger underwriting divisions, with particular strength in
excess casualty, excess property, general casualty and
manufacturers and contractors. Renewal rate increases were 11.0%
during the second quarter of 2023, representing the twenty-sixth
consecutive quarter of renewal rate increases compounding to
72.3%.
- Gross written premium for the
Specialty Admitted Insurance segment increased 9.6% from the prior
year quarter, including an 11.0% increase in fronting and program
premium. During the quarter there was a combined 3.9% reduction to
premium from our individual risk workers' compensation business and
our large workers' compensation fronted program, which was
partially offset by strong growth in our remaining fronting and
program business.
- Gross written premium in the
Casualty Reinsurance segment totaled $4.7 million and was solely
related to premium adjustments. As announced earlier this year, we
have suspended underwriting business in our Casualty Reinsurance
segment and have not written or renewed any treaties this year. The
earning pattern of the business can extend over multiple years and
declines in net earned premium for this segment will lag written
premium. We expect to continue to report earned premium over the
next several quarters.
- Pre-tax favorable (unfavorable)
reserve development by segment on business not subject to
retroactive reinsurance accounting for loss portfolio transfers was
as follows:
|
Three Months EndedJune 30, |
($ in
thousands) |
2023 |
|
2022 |
Excess and Surplus Lines |
$ |
(118 |
) |
|
$ |
32 |
Specialty Admitted
Insurance |
|
839 |
|
|
|
1,545 |
Casualty Reinsurance |
|
(3,009 |
) |
|
|
— |
|
$ |
(2,288 |
) |
|
$ |
1,577 |
|
- Additionally, the Company
recognized adverse prior year development of $12.6 million on the
reserves subject to the Commercial Auto LPT, which provides
unlimited coverage, and $5.8 million on the reserves subject to the
Casualty Reinsurance LPT. Retroactive benefits of $17.8 million
were recorded in loss and loss adjustment expenses during the
second quarter and the deferred retroactive reinsurance gain on the
Balance Sheet is $37.6 million as of June 30, 2023.
- Gross fee income was as follows:
|
Three Months EndedJune 30, |
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
Specialty Admitted Insurance |
$ |
5,800 |
|
$ |
5,875 |
|
(1 |
)% |
|
- The consolidated
expense ratio was 27.5% for the second quarter of 2023, which was
an increase from 25.8% in the prior year second quarter. The
expense ratio was primarily impacted by changes in reinsurance
cessions in both E&S and Specialty Admitted segments that
resulted in a lower level of ceding commissions in the current
period.
Investment Results
Net investment income for the second quarter of
2023 was $25.2 million, an increase of 71.2% compared to $14.7
million in the prior year quarter. Growth in income was broad-based
across the portfolio, as positive operating cash flow and portfolio
cash flow was deployed at higher yields. On a sequential basis,
income increased modestly for all asset classes with the exception
of our private investments.
The Company’s net investment income consisted of
the following:
|
Three Months EndedJune 30, |
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
Private Investments |
|
232 |
|
|
(490 |
) |
|
NM |
|
All Other Investments |
|
24,943 |
|
|
15,195 |
|
|
64 |
% |
Total Net Investment
Income |
$ |
25,175 |
|
$ |
14,705 |
|
|
71 |
% |
|
The Company’s annualized gross investment yield
on average fixed maturity, bank loan and equity securities for the
three months ended June 30, 2023 was 4.3% (versus 3.4% for the
three months ended June 30, 2022). The investment yield increased
primarily as a result of higher market yields on fixed maturity
securities and bank loans.
Net realized and unrealized gains on investments
of $2.1 million for the three months ended June 30, 2023 compared
to net realized and unrealized losses on investments of $17.1
million in the prior year quarter. The majority of the realized and
unrealized gains during the second quarter of 2023 were related to
changes in fair values of our secured bank loan portfolio and, to a
lesser extent, our common equity investments.
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 for the six months ended June
30, 2023 was 23.9%.
Tangible Equity
Tangible equity3 of $561.1 million at
June 30, 2023 increased 1.0% compared to tangible equity of
$555.4 million at March 31, 2023, as strong earnings was partially
offset by unrealized investment losses. AOCI declined by $16.5
million during the second quarter of 2023, due to a decrease in the
value of the Company's fixed maturity securities.
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 Friday, September 29, 2023 to all
shareholders of record on Monday, September 11, 2023.
Conference Call
James River will hold a conference call to
discuss its second quarter results tomorrow, August 8, 2023 at 8:30
a.m. Eastern Time. Investors may access the conference call by
dialing (800) 715-9871, Conference ID 8809552, 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.
________________________3 Tangible equity is a
non-GAAP financial measure. See “Non-GAAP Financial Measures” and
“Reconciliation of Non-GAAP Financial Measures” at the end of this
press release.
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 and reinsurance business that our subsidiaries write, our
competitive position, and our financial condition; 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 persistent 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 any of its foreign
subsidiaries 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
(“Sarbanes-Oxley”); 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. 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 and reinsurance companies. The Company
operates in three specialty property-casualty insurance and
reinsurance segments: Excess and Surplus Lines, Specialty Admitted
Insurance and Casualty Reinsurance. 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
For more information
contact:
Brett ShirreffsSVP, Finance, Investments and
Investor RelationsInvestors@jrvrgroup.com
James River Group Holdings, Ltd. and
SubsidiariesCondensed Consolidated Balance Sheet
Data (Unaudited)
($ in thousands,
except for share data) |
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Invested assets: |
|
|
|
Fixed maturity securities, available-for-sale, at fair value |
$ |
1,875,695 |
|
$ |
1,783,417 |
Equity securities, at fair
value |
|
118,116 |
|
|
118,627 |
Bank loan participations, at
fair value |
|
143,762 |
|
|
154,991 |
Short-term investments |
|
22,128 |
|
|
107,812 |
Other invested assets |
|
27,415 |
|
|
27,447 |
Total invested assets |
|
2,187,116 |
|
|
2,192,294 |
|
|
|
|
Cash and cash equivalents |
|
227,239 |
|
|
173,164 |
Restricted cash equivalents
(a) |
|
105,502 |
|
|
103,215 |
Accrued investment income |
|
16,805 |
|
|
14,418 |
Premiums receivable and
agents’ balances, net |
|
364,842 |
|
|
340,525 |
Reinsurance recoverable on
unpaid losses, net |
|
1,545,736 |
|
|
1,520,113 |
Reinsurance recoverable on
paid losses |
|
181,956 |
|
|
114,242 |
Deferred policy acquisition
costs |
|
51,668 |
|
|
59,603 |
Goodwill and intangible
assets |
|
217,325 |
|
|
217,507 |
Other assets |
|
397,681 |
|
|
401,994 |
Total assets |
$ |
5,295,870 |
|
$ |
5,137,075 |
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Reserve for losses and loss
adjustment expenses |
$ |
2,885,379 |
|
$ |
2,768,995 |
Unearned premiums |
|
665,189 |
|
|
676,016 |
Funds held (a) |
|
275,331 |
|
|
310,953 |
Deferred reinsurance gain |
|
37,572 |
|
|
20,091 |
Senior debt |
|
222,300 |
|
|
222,300 |
Junior subordinated debt |
|
104,055 |
|
|
104,055 |
Accrued expenses |
|
52,507 |
|
|
59,566 |
Other liabilities |
|
312,716 |
|
|
276,435 |
Total liabilities |
|
4,555,049 |
|
|
4,438,411 |
|
|
|
|
Series A redeemable preferred
shares |
|
144,898 |
|
|
144,898 |
Total shareholders’
equity |
|
595,923 |
|
|
553,766 |
Total liabilities, Series A
redeemable preferred shares, and shareholders’ equity |
$ |
5,295,870 |
|
$ |
5,137,075 |
|
|
|
|
Tangible equity (b) |
$ |
561,068 |
|
$ |
501,248 |
Tangible equity per share outstanding (b) |
$ |
12.97 |
|
$ |
11.63 |
Shareholders' equity per share
outstanding |
$ |
15.84 |
|
$ |
14.78 |
Common shares outstanding |
|
37,619,226 |
|
|
37,470,237 |
|
|
|
|
(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. The
funds held liability also includes a notional funds withheld
account balance related to the loss portfolio transfer retrocession
transaction that our Casualty Reinsurance segment entered into in
the first quarter of 2022, which is reduced quarterly by paid
losses on the subject business. |
(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) |
2023 |
|
2022 |
|
2023 |
|
2022 |
REVENUES |
|
|
|
|
|
|
|
Gross written premiums |
$ |
427,741 |
|
|
$ |
399,714 |
|
|
$ |
791,634 |
|
|
$ |
759,650 |
|
Net written premiums |
|
218,179 |
|
|
|
194,691 |
|
|
|
401,399 |
|
|
|
370,550 |
|
|
|
|
|
|
|
|
|
Net earned premiums |
|
209,658 |
|
|
|
186,262 |
|
|
|
417,771 |
|
|
|
376,086 |
|
Net investment income |
|
25,175 |
|
|
|
14,705 |
|
|
|
50,947 |
|
|
|
30,972 |
|
Net realized and unrealized
gains (losses) on investments |
|
2,145 |
|
|
|
(17,110 |
) |
|
|
2,552 |
|
|
|
(22,120 |
) |
Other income |
|
1,464 |
|
|
|
949 |
|
|
|
2,773 |
|
|
|
1,816 |
|
Total revenues |
|
238,442 |
|
|
|
184,806 |
|
|
|
474,043 |
|
|
|
386,754 |
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
Losses and loss adjustment
expenses (a) |
|
141,308 |
|
|
|
121,369 |
|
|
|
296,596 |
|
|
|
256,977 |
|
Other operating expenses |
|
58,865 |
|
|
|
49,036 |
|
|
|
119,124 |
|
|
|
99,097 |
|
Other expenses |
|
223 |
|
|
|
— |
|
|
|
826 |
|
|
|
368 |
|
Interest expense |
|
6,941 |
|
|
|
4,049 |
|
|
|
13,557 |
|
|
|
6,341 |
|
Amortization of intangible
assets |
|
91 |
|
|
|
91 |
|
|
|
182 |
|
|
|
182 |
|
Total expenses |
|
207,428 |
|
|
|
174,545 |
|
|
|
430,285 |
|
|
|
362,965 |
|
Income before taxes |
|
31,014 |
|
|
|
10,261 |
|
|
|
43,758 |
|
|
|
23,789 |
|
Income tax expense |
|
7,321 |
|
|
|
2,597 |
|
|
|
10,457 |
|
|
|
5,920 |
|
NET
INCOME |
$ |
23,693 |
|
|
$ |
7,664 |
|
|
$ |
33,301 |
|
|
$ |
17,869 |
|
Dividends on Series A
preferred shares |
|
(2,625 |
) |
|
|
(2,625 |
) |
|
|
(5,250 |
) |
|
|
(3,500 |
) |
NET INCOME AVAILABLE
TO COMMON SHAREHOLDERS |
$ |
21,068 |
|
|
$ |
5,039 |
|
|
$ |
28,051 |
|
|
$ |
14,369 |
|
ADJUSTED NET OPERATING
INCOME(b) |
$ |
20,551 |
|
|
$ |
20,025 |
|
|
$ |
42,142 |
|
|
$ |
33,892 |
|
|
|
|
|
|
|
|
|
INCOME PER COMMON
SHARE |
|
|
|
|
|
|
|
Basic |
$ |
0.56 |
|
|
$ |
0.13 |
|
|
$ |
0.75 |
|
|
$ |
0.38 |
|
Diluted (c) |
$ |
0.54 |
|
|
$ |
0.13 |
|
|
$ |
0.74 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
ADJUSTED
NET OPERATING INCOME PER COMMON SHARE |
|
|
|
|
Basic |
$ |
0.55 |
|
|
$ |
0.53 |
|
|
$ |
1.12 |
|
|
$ |
0.91 |
|
Diluted (d) |
$ |
0.53 |
|
|
$ |
0.52 |
|
|
$ |
1.09 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
37,642,289 |
|
|
|
37,449,621 |
|
|
|
37,587,359 |
|
|
|
37,428,385 |
|
Diluted |
|
43,498,905 |
|
|
|
37,732,371 |
|
|
|
37,822,405 |
|
|
|
37,643,634 |
|
Cash dividends declared per
common share |
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
Loss ratio |
|
67.1 |
% |
|
|
65.2 |
% |
|
|
66.8 |
% |
|
|
68.3 |
% |
Expense ratio (e) |
|
27.5 |
% |
|
|
25.8 |
% |
|
|
27.9 |
% |
|
|
25.9 |
% |
Combined ratio |
|
94.6 |
% |
|
|
91.0 |
% |
|
|
94.7 |
% |
|
|
94.2 |
% |
Accident year loss ratio |
|
66.0 |
% |
|
|
66.0 |
% |
|
|
65.9 |
% |
|
|
66.9 |
% |
|
|
|
|
|
|
|
|
(a) Losses and
loss adjustment expenses include $0.6 million and $17.5 million of
expense for unrecognized deferred retroactive reinsurance gains for
the three and six months ended June 30, 2023, respectively. |
(b) See
"Reconciliation of Non-GAAP Measures". |
(c) The
outstanding Series A preferred shares were dilutive for the three
months ended June 30, 2023. Dividends on the Series A
preferred shares were added back to the numerator in the
calculations and 5,640,158 common shares from an assumed conversion
of the Series A preferred shares were included in the
denominator. |
(d) The
outstanding Series A preferred shares were dilutive for the three
and six months ended June 30, 2023. Dividends on the Series A
preferred shares were added back to the numerator in the
calculations and 5,640,158 common shares from an assumed conversion
of the Series A preferred shares were included in the
denominator. |
(e) 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 $2.4
million for the three and six months ended June 30, 2023,
respectively ($900,000 and $1.7 million in the respective prior
year periods), and a denominator of net earned premiums. |
|
James River Group Holdings, Ltd. and
SubsidiariesSegment Results
EXCESS AND SURPLUS LINES
|
Three Months EndedJune 30, |
|
|
|
Six Months EndedJune 30, |
|
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
Gross written premiums |
$ |
286,126 |
|
|
$ |
266,635 |
|
|
7.3 |
% |
|
$ |
515,029 |
|
|
$ |
470,917 |
|
|
9.4 |
% |
Net written premiums |
$ |
184,768 |
|
|
$ |
166,004 |
|
|
11.3 |
% |
|
$ |
332,198 |
|
|
$ |
291,714 |
|
|
13.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premiums |
$ |
159,002 |
|
|
$ |
137,884 |
|
|
15.3 |
% |
|
$ |
310,361 |
|
|
$ |
269,185 |
|
|
15.3 |
% |
Losses and loss adjustment
expenses excluding retroactive reinsurance |
|
(105,098 |
) |
|
|
(89,184 |
) |
|
17.8 |
% |
|
|
(204,287 |
) |
|
|
(174,109 |
) |
|
17.3 |
% |
Underwriting expenses |
|
(34,471 |
) |
|
|
(26,366 |
) |
|
30.7 |
% |
|
|
(66,646 |
) |
|
|
(51,285 |
) |
|
30.0 |
% |
Underwriting profit (a) |
$ |
19,433 |
|
|
$ |
22,334 |
|
|
(13.0 |
)% |
|
$ |
39,428 |
|
|
$ |
43,791 |
|
|
(10.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
|
66.1 |
% |
|
|
64.7 |
% |
|
|
|
|
65.8 |
% |
|
|
64.7 |
% |
|
|
Expense ratio |
|
21.7 |
% |
|
|
19.1 |
% |
|
|
|
|
21.5 |
% |
|
|
19.0 |
% |
|
|
Combined ratio |
|
87.8 |
% |
|
|
83.8 |
% |
|
|
|
|
87.3 |
% |
|
|
83.7 |
% |
|
|
Accident year loss ratio |
|
66.0 |
% |
|
|
64.7 |
% |
|
|
|
|
65.9 |
% |
|
|
64.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See
"Reconciliation of Non-GAAP Measures". |
|
SPECIALTY ADMITTED INSURANCE
|
Three Months EndedJune 30, |
|
|
|
Six Months EndedJune 30, |
|
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
Gross written premiums |
$ |
136,924 |
|
|
$ |
124,967 |
|
|
9.6 |
% |
|
$ |
261,475 |
|
|
$ |
250,677 |
|
|
4.3 |
% |
Net written premiums |
$ |
29,116 |
|
|
$ |
18,390 |
|
|
58.3 |
% |
|
$ |
55,841 |
|
|
$ |
38,595 |
|
|
44.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premiums |
$ |
23,858 |
|
|
$ |
18,141 |
|
|
31.5 |
% |
|
$ |
44,339 |
|
|
$ |
37,459 |
|
|
18.4 |
% |
Losses and loss adjustment
expenses |
|
(17,594 |
) |
|
|
(13,217 |
) |
|
33.1 |
% |
|
|
(33,086 |
) |
|
|
(28,652 |
) |
|
15.5 |
% |
Underwriting expenses |
|
(5,880 |
) |
|
|
(3,672 |
) |
|
60.1 |
% |
|
|
(11,338 |
) |
|
|
(7,346 |
) |
|
54.3 |
% |
Underwriting profit (loss)
(a), (b) |
$ |
384 |
|
|
$ |
1,252 |
|
|
(69.3 |
)% |
|
$ |
(85 |
) |
|
$ |
1,461 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
|
73.7 |
% |
|
|
72.9 |
% |
|
|
|
|
74.6 |
% |
|
|
76.5 |
% |
|
|
Expense ratio |
|
24.7 |
% |
|
|
20.2 |
% |
|
|
|
|
25.6 |
% |
|
|
19.6 |
% |
|
|
Combined ratio |
|
98.4 |
% |
|
|
93.1 |
% |
|
|
|
|
100.2 |
% |
|
|
96.1 |
% |
|
|
Accident year loss ratio |
|
77.3 |
% |
|
|
81.4 |
% |
|
|
|
|
76.9 |
% |
|
|
80.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See
"Reconciliation of Non-GAAP Measures". |
(b) Underwriting results for the three and six months ended
June 30, 2023 include gross fee income of $5.8 million and
$11.5 million, respectively ($5.9 million and $11.4 million in the
respective prior year periods). |
|
CASUALTY REINSURANCE
|
Three Months EndedJune 30, |
|
|
|
|
Six Months EndedJune 30, |
|
|
|
($ in
thousands) |
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
Gross written premiums |
$ |
4,691 |
|
|
$ |
8,112 |
|
|
(42.2 |
)% |
|
$ |
15,130 |
|
|
$ |
38,056 |
|
|
(60.2 |
)% |
Net written premiums |
$ |
4,295 |
|
|
$ |
10,297 |
|
|
(58.3 |
)% |
|
$ |
13,360 |
|
|
$ |
40,241 |
|
|
(66.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earned premiums |
$ |
26,798 |
|
|
$ |
30,237 |
|
|
(11.4 |
)% |
|
$ |
63,071 |
|
|
$ |
69,442 |
|
|
(9.2 |
)% |
Losses and loss adjustment
expenses excluding retroactive reinsurance |
|
(17,998 |
) |
|
|
(18,968 |
) |
|
(5.1 |
)% |
|
|
(41,742 |
) |
|
|
(54,216 |
) |
|
(23.0 |
)% |
Underwriting expenses |
|
(8,672 |
) |
|
|
(9,210 |
) |
|
(5.8 |
)% |
|
|
(20,895 |
) |
|
|
(22,004 |
) |
|
(5.0 |
)% |
Underwriting profit (loss)
(a) |
$ |
128 |
|
|
$ |
2,059 |
|
|
(93.8 |
)% |
|
$ |
434 |
|
|
$ |
(6,778 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio |
|
67.2 |
% |
|
|
62.7 |
% |
|
|
|
|
|
66.2 |
% |
|
|
78.1 |
% |
|
|
|
Expense ratio |
|
32.3 |
% |
|
|
30.5 |
% |
|
|
|
|
|
33.1 |
% |
|
|
31.7 |
% |
|
|
|
Combined ratio |
|
99.5 |
% |
|
|
93.2 |
% |
|
|
|
|
|
99.3 |
% |
|
|
109.8 |
% |
|
|
|
Accident year loss ratio |
|
55.9 |
% |
|
|
62.7 |
% |
|
|
|
|
|
58.5 |
% |
|
|
68.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See
"Reconciliation of Non-GAAP Measures". |
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting Performance Ratios
The following table provides the underwriting
performance ratios of the Company 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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Excess and Surplus
Lines: |
|
|
|
|
|
|
|
Loss Ratio |
66.1 |
% |
|
64.7 |
% |
|
65.8 |
% |
|
64.7 |
% |
Impact of retroactive
reinsurance |
(1.4 |
)% |
|
— |
% |
|
3.0 |
% |
|
— |
% |
Loss Ratio including impact of
retroactive reinsurance |
64.7 |
% |
|
64.7 |
% |
|
68.8 |
% |
|
64.7 |
% |
|
|
|
|
|
|
|
|
Combined Ratio |
87.8 |
% |
|
83.8 |
% |
|
87.3 |
% |
|
83.7 |
% |
Impact of retroactive
reinsurance |
(1.4 |
)% |
|
— |
% |
|
3.0 |
% |
|
— |
% |
Combined Ratio including
impact of retroactive reinsurance |
86.4 |
% |
|
83.8 |
% |
|
90.3 |
% |
|
83.7 |
% |
|
|
|
|
|
|
|
|
Casualty
Reinsurance: |
|
|
|
|
|
|
|
Loss Ratio |
67.2 |
% |
|
62.7 |
% |
|
66.2 |
% |
|
78.1 |
% |
Impact of retroactive
reinsurance |
10.7 |
% |
|
— |
% |
|
12.7 |
% |
|
— |
% |
Loss Ratio including impact of
retroactive reinsurance |
77.9 |
% |
|
62.7 |
% |
|
78.9 |
% |
|
78.1 |
% |
|
|
|
|
|
|
|
|
Combined Ratio |
99.5 |
% |
|
93.2 |
% |
|
99.3 |
% |
|
109.8 |
% |
Impact of retroactive
reinsurance |
10.7 |
% |
|
— |
% |
|
12.7 |
% |
|
— |
% |
Combined Ratio including
impact of retroactive reinsurance |
110.2 |
% |
|
93.2 |
% |
|
112.0 |
% |
|
109.8 |
% |
|
|
|
|
|
|
|
|
Consolidated: |
|
|
|
|
|
|
|
Loss Ratio |
67.1 |
% |
|
65.2 |
% |
|
66.8 |
% |
|
68.3 |
% |
Impact of retroactive
reinsurance |
0.3 |
% |
|
— |
% |
|
4.2 |
% |
|
— |
% |
Loss Ratio including impact of
retroactive reinsurance |
67.4 |
% |
|
65.2 |
% |
|
71.0 |
% |
|
68.3 |
% |
|
|
|
|
|
|
|
|
Combined Ratio |
94.6 |
% |
|
91.0 |
% |
|
94.7 |
% |
|
94.2 |
% |
Impact of retroactive
reinsurance |
0.3 |
% |
|
— |
% |
|
4.2 |
% |
|
— |
% |
Combined Ratio including
impact of retroactive reinsurance |
94.9 |
% |
|
91.0 |
% |
|
98.9 |
% |
|
94.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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 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 excluding the impact of loss
portfolio transfers accounted for as retroactive reinsurance 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) |
2023 |
|
2022 |
|
2023 |
|
2022 |
Underwriting profit (loss) of the operating segments: |
|
|
|
|
|
|
|
Excess and Surplus Lines |
$ |
19,433 |
|
|
$ |
22,334 |
|
|
$ |
39,428 |
|
|
$ |
43,791 |
|
Specialty Admitted Insurance |
|
384 |
|
|
|
1,252 |
|
|
|
(85 |
) |
|
|
1,461 |
|
Casualty Reinsurance |
|
128 |
|
|
|
2,059 |
|
|
|
434 |
|
|
|
(6,778 |
) |
Total underwriting profit of
operating segments |
|
19,945 |
|
|
|
25,645 |
|
|
|
39,777 |
|
|
|
38,474 |
|
Other operating expenses of
the Corporate and Other segment |
|
(8,548 |
) |
|
|
(8,888 |
) |
|
|
(17,830 |
) |
|
|
(16,762 |
) |
Underwriting profit (a) |
|
11,397 |
|
|
|
16,757 |
|
|
|
21,947 |
|
|
|
21,712 |
|
Losses and loss adjustment
expenses - retroactive reinsurance |
|
(618 |
) |
|
|
— |
|
|
|
(17,481 |
) |
|
|
— |
|
Net investment income |
|
25,175 |
|
|
|
14,705 |
|
|
|
50,947 |
|
|
|
30,972 |
|
Net realized and unrealized
gains (losses) on investments |
|
2,145 |
|
|
|
(17,110 |
) |
|
|
2,552 |
|
|
|
(22,120 |
) |
Other expense |
|
(53 |
) |
|
|
49 |
|
|
|
(468 |
) |
|
|
(252 |
) |
Interest expense |
|
(6,941 |
) |
|
|
(4,049 |
) |
|
|
(13,557 |
) |
|
|
(6,341 |
) |
Amortization of intangible
assets |
|
(91 |
) |
|
|
(91 |
) |
|
|
(182 |
) |
|
|
(182 |
) |
Consolidated income before
taxes |
$ |
31,014 |
|
|
$ |
10,261 |
|
|
$ |
43,758 |
|
|
$ |
23,789 |
|
|
|
|
|
|
|
|
|
(a) Included in underwriting results for the three and six months
ended June 30, 2023 is gross fee income of $5.8 million and
$11.5 million, respectively ($5.9 million and $11.4 million in the
respective prior year periods). |
|
Adjusted Net Operating
Income
We define adjusted net operating income as
income available to common shareholders excluding a) the impact of
loss portfolio transfers accounted for as retroactive reinsurance,
b) net realized and unrealized gains (losses) on investments, c)
certain non-operating expenses such as professional service fees
related to a purported class action lawsuit, various strategic
initiatives, and the filing of registration statements for the
offering of securities, and d) severance costs associated with
terminated employees. We use adjusted net operating income as an
internal performance measure in the management of our operations
because we believe it gives our management and other users of our
financial information useful insight into our results of operations
and our underlying business performance. Adjusted net operating
income should not be viewed as a substitute for net income
calculated in accordance with GAAP, and our definition of adjusted
net operating income may not be comparable to that of other
companies.
Our income available to common shareholders
reconciles to our adjusted net operating income as follows:
|
Three Months Ended June 30, |
|
2023 |
|
2022 |
($ in
thousands) |
IncomeBeforeTaxes |
|
NetIncome |
|
IncomeBeforeTaxes |
|
NetIncome |
Income available to common shareholders |
$ |
28,389 |
|
|
$ |
21,068 |
|
|
$ |
7,636 |
|
$ |
5,039 |
Losses and loss adjustment
expenses - retroactive reinsurance |
|
618 |
|
|
|
1,091 |
|
|
|
— |
|
|
— |
Net realized and unrealized
investment (gains) losses |
|
(2,145 |
) |
|
|
(1,806 |
) |
|
|
17,110 |
|
|
14,986 |
Other expenses |
|
223 |
|
|
|
198 |
|
|
|
— |
|
|
— |
Adjusted net operating
income |
$ |
27,085 |
|
|
$ |
20,551 |
|
|
$ |
24,746 |
|
$ |
20,025 |
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
($ in
thousands) |
IncomeBeforeTaxes |
|
NetIncome |
|
IncomeBeforeTaxes |
|
NetIncome |
Income available to common
shareholders |
$ |
38,508 |
|
|
$ |
28,051 |
|
|
$ |
20,289 |
|
$ |
14,369 |
Losses and loss adjustment
expenses - retroactive reinsurance |
|
17,481 |
|
|
|
15,497 |
|
|
|
— |
|
|
— |
Net realized and unrealized
investment (gains) losses |
|
(2,552 |
) |
|
|
(2,179 |
) |
|
|
22,120 |
|
|
19,176 |
Other expenses |
|
798 |
|
|
|
773 |
|
|
|
347 |
|
|
347 |
Adjusted net operating
income |
$ |
54,235 |
|
|
$ |
42,142 |
|
|
$ |
42,756 |
|
$ |
33,892 |
|
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, 2023, March 31, 2023, December 31, 2022, and
June 30, 2022.
|
June 30, 2023 |
|
March 31, 2023 |
|
December 31, 2022 |
|
June 30, 2022 |
($ in thousands,
except for share data) |
|
|
|
|
|
|
|
Shareholders' equity |
$ |
595,923 |
|
$ |
590,915 |
|
$ |
553,766 |
|
$ |
594,386 |
Plus: Series A redeemable
preferred shares |
|
144,898 |
|
|
144,898 |
|
|
144,898 |
|
|
144,898 |
Plus: Deferred reinsurance
gain |
|
37,572 |
|
|
36,954 |
|
|
20,091 |
|
|
— |
Less: Goodwill and intangible
assets |
|
217,325 |
|
|
217,416 |
|
|
217,507 |
|
|
217,688 |
Tangible equity |
$ |
561,068 |
|
$ |
555,351 |
|
$ |
501,248 |
|
$ |
521,596 |
Less: Series A redeemable
preferred shares |
|
144,898 |
|
|
144,898 |
|
|
144,898 |
|
|
144,898 |
Tangible common equity |
$ |
416,170 |
|
$ |
410,453 |
|
$ |
356,350 |
|
$ |
376,698 |
|
|
|
|
|
|
|
|
Common shares outstanding |
|
37,619,226 |
|
|
37,619,226 |
|
|
37,470,237 |
|
|
37,450,264 |
Common shares from assumed
conversion of Series A preferred shares |
|
5,640,158 |
|
|
5,640,158 |
|
|
5,640,158 |
|
|
5,640,158 |
Common shares outstanding
after assumed conversion of Series A preferred shares |
|
43,259,384 |
|
|
43,259,384 |
|
|
43,110,395 |
|
|
43,090,422 |
|
|
|
|
|
|
|
|
Equity per share: |
|
|
|
|
|
|
|
Shareholders' equity |
$ |
15.84 |
|
$ |
15.71 |
|
$ |
14.78 |
|
$ |
15.87 |
Tangible equity |
$ |
12.97 |
|
$ |
12.84 |
|
$ |
11.63 |
|
$ |
12.10 |
Tangible common equity |
$ |
11.06 |
|
$ |
10.91 |
|
$ |
9.51 |
|
$ |
10.06 |
James River (NASDAQ:JRVR)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
James River (NASDAQ:JRVR)
Gráfica de Acción Histórica
De May 2023 a May 2024