James River (JRVR) 12 Nov 242024 Q3 Earnings call transcript

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the James River Group Q3 2024 Earnings Call.

[Operator Instructions] I would now like to turn the call over to Zachary Shytle, Investor Relations. Please go ahead.

welcome Conference James Call. and Quarter Group everyone, Earnings XXXX morning, to River the Third Good

intentions, that During forward-looking and differ are beliefs, materially. statements. call, uncertainties, These and the we actual statements based will which may on results various subject to are be cause making expectations, risks assumptions to current

XX-K For cautionary and statements Form forward-looking earnings do release XX-Q language the to most forward-looking duty of factors and in made risks our update Securities any and uncertainties, and reports statements. we such discussion Exchange other regarding a please Commission. the of risk and We see and have undertake any the yesterday's not recent filings with

adjusted equity, a net our tangible these refer income, tangible www.jrvrgroup.com. GAAP, during equity, adjusted equity. tangible press profit, on and release operating presentation, for at reconciliation be can In reference addition, non-GAAP as this underwriting common operating may our found earnings website Please common a which of we return net to copy on of to financial such numbers measures

retroactive that in not specified, are our described performance business the operations reasons ratios press accounting reinsurance for portfolio earnings loss transfers. Lastly, unless and all otherwise referred release, to for to subject for our continuing underwriting is

to I of over now will turn Executive the Frank Officer Chief D'Orazio, call James River Group.

this be you welcome earnings FAQ and third quarter corresponding very that, active with actions our referring joining we to night quarter to I'm XXXX a to the our specifically, for our strategic you by or that document. and And presentation has We're Good introduction, River. meaningful announced investor for that James excited call. everyone, last Thank discuss been to morning, Zach. earnings what morning

voices investments detailed the most outlook validating announcements, of providing company specific on most claims amongst release existing sector, to X few and James has speak to transformation the last also I investors other, an of the to addition the announced sophisticated for River. who and one significant future investor the market insurance P&C from night's the and over being conditions refocused in reserving our respected industry's years. the Last plan to the In commentary witnessed

other and capital charges, our our attractive work favorably opportunities across as position on sheet balance reduction meaningful focus fixed a to we actions, E&S to in well-regarded seeing that These franchise. including putting the our we're

of Group agreed our top $XX.X additional invest it the First, equity million of has and shares above will Through market. in common Enstar foremost transaction, open previously issued that on had on price we an industry's Enstar, expect in be the $X.XX capital. to at shareholders. this a reserves, one among newly over share purchased voices X the

our in then pushing strengthened equity and we upon dividend, X for reset. preferred at reduced have out of as doing but base, also outstanding it also preferred to at or also amended common years it as by total security held X% capping by $XX.X Gallatin A price shares $X.XX. the the We converted XX% and share a million Series Capital equity, common so, to of Point stay quantum well the convertible In both

quarterly common per also dividend we've our $X.XX Finally, reduced share. to

the address derisk worked to allow remaining gross issues Enstar to Next, XXXX, entered National from announced bound have million development and directly we legacy $XX in reduce with limit continue in to we reserves closing a also cover years its XXXX layer top-up legacy balance reserve our have State $XXX regulatory our on it late to coverage million legacy portfolio. the approval, cover joined accident efforts I into Upon company sheet company to of with diligently adverse this our July. volatility, new attaching of the strength. on above in Since and E&S we've protect focus to reserve will the to following organization XXXX, E&S

we to E&S business well benefiting take past forward River and With have extremely advantage positioned and we've off franchise. these James the still actions, underwriting walled environment our move from development of reserve believe the robust

company E&S strategic aware future conclusion sale further the With Board has insurance at our company investors, their of available feels is value, today, bringing now responsibilities strategic shareholder on with this Board time our bolstered of of now James has would to shareholders compelling continue leading review balance appropriate. result, future poised and by the the sheet as and to proposals will beyond provide to well to flagship validated review be Fully simplified in and company the the the create River operations refocused a to and responsive that concluded what industry but the to Directors the concluded significant is shareholders, process. a be value to

of back the July those actuarial in both announced our well. The to turning well a $X.XX to $X.XX We operating quarter the this for vast was we detailed of and the those of impact on of topics operations continuing and for per net as items the a provide in driven valuation Now details loss from will quarter our ADC, the share. loss results of quarter. results majority and third review. reported as of State by which Sarah National net additional moment, accounted as also loss adjusted I'll come per share

the reporting the of accident segment current quarter frame ratio XX.X%. third ADC but XXX.X%, National ratio is segment impact for the State combined the briefly a to E&S year combined and we the However, charge, for the reserve of are

the rate for write profitable strong employee attractive. very increases. flagship E&S remain weighted strong and increasing Casualty growth General the year. robust highlight saw of to over continue XX%. meaningful heavily divisions, trends third of from from Environmental submissions unwavering benefit continuation business distribution XX%, partners. Submission XX%. and from continued XX,XXX of strong platform we increased this XX% SME saw while renewal see during respectively, to would new opportunities our submission Our support to submissions to again manufacturers conditions and We have and quarter, with submissions business which third benefit experienced portfolio across submission our continues growth quarter the and be XX%, a retention growth our We contractors and during our while growth submission Underwriting significant I saw

business General the and the divisions to single-digit renewal the up underwriting up exceed In are our submission saw rate across while pricing attractive generate up we Environmental divisions. experience what favorable pricing remain for Casualty X.X% for quarter, that to the range and our growth, were continues Excess increases of E&S increases segment quarter rates Casualty majority additions in addition XX The X%, across rate We us underwriting in increases believe high to each in trends, the excess our allowing confident X.X% saw of year-to-date. margins energy XX%. was portfolio. loss continuing were Rates be on X%. slightly to will while Renewal

the contractors. segment X% by led of during in gross grew growth Our premiums XX% and E&S manufacturers Casualty quarter, Excess by in and XX%

continued XXXX. property Comparatively, grew market excess as to and written pricing quarter. underwriting quarter. the Our on to of portfolio X.X% the X% prior overall And terms see pressure compared year quarter a unit the compared our during to casualty gross premiums by declined third result,

transaction the X to combined the an our for also previewed ratio segment $XX.X while third the quarter. substantial valuation X during detailed ago, by with results underwriting National As review for our E&S moments of of of really E&S internal year our our was loss previously the the State influenced impact quarter, legacy reserves. dynamics segment disclosed pushed the These and were E&S reinsurance loss as dynamics million ratio XXX.X% quarter, accident XX.X% produced E&S

annual valuation to entire which continued capabilities have reserve a our we our is or around DVR, including years, reserve in-depth a enhance process, several review quarter past internal more and of risk the review, our management, balance. enterprise Over improve E&S third review detailed

granular review [ a we've Over thorough process to and the of segmentation, past. than more make more of new more the parameter the and this this reserves. in detailed last it analysis Enhancements both ] X been methods, to steps years, gross even introduction refined AO include had and taken

additional the minutes of discussing to Before moving the findings I'd DVR a on, process. like spend few

have and we loss reserves, our adjustments While for development lines, our lesser million extent, of have other reacted our have we reserve to liability and sessions National lines and pressure view most put made to tail responded occurrence This in carried trend ADC. selected on factors. in process to overall charge increases liability in of accordingly. to to severity, These increased a most and actions loss $XX frequency our product the business, a observed was materially down acute response State prior our in resulted

business applying quarter is of when cover are occurrence the in premium the some in basis, State our to reserve majority the July. The National accident $XX includes the XXXX and concentrated and announced National which provided the years XXXX transaction the previously in in State segments. for paid than more are and On prior million, ADC, conjunction liability net of of offsetting $XX.X reserve million to smaller other liability in the other the product lines XXXX the years with movements we by additions announced charge a the with

over numerous over energy, the in excess underwriting said our premiums, have of expense casualty, we few portfolio years I've the commercial few divisions. across and casualty the As nonrenewed the auto, quarters, changes at general made last especially last underwriting

coverage, or our portfolio adding exiting exclusionary of have underwriters the taken future compounding actions the years better ample of segment. culture through restrict while establishing language the challenging or to several Whether further position change, to of profitability positive the underwriting proactive sublimits classes rate

these analysis indications. early We promising actuarial recognizing are underwriting in despite remaining date any toward of improvements cautious our to

in be recognizing XXXX Our XXXX of although accident to patient belief DVR we the process years, it. reaffirmed in our profitability and the expect

business on impact in of produced an performs ratio that and to $X.X Turning excluding segment in The third Specialty is its XX% now a workers' compared combined the quarter. and underwriting year-to-date, year's our continues Admitted million execute of of and quarter overall written runoff. profit increased fronting very Gross for and to Specialty Admitted. the well. objectives XX.X% programs to X% the compensation prior premiums business

Point. losses firmly Finally, third our I strategic because that quarter. In summary, We legacy E&S past additional they providing for validating actions particularly certainty we believe no move James Enstar River's partners. our distribution are should we look announcing segments the exiting the help review forward and Specialty the of stakeholders, net with the Gallatin mention about or experienced that to the the of cat and of employees, are either process benefit company Admitted to this excited for the to quarter we us and strategic investments past, issues

after sheet take shareholders. of advantage We company's underwriting well and actions significant are bullish derisk as for value quarter the ahead continue while fourth prospects opportunities to looking to to taking as about the the to are balance XXXX creating

quarter. the on And with color that, I'll some Sarah to provide ask additional

much, thanks you and Good today. Thank Frank. morning, joining very everyone, us for

as E&S quarter X part as included loss the charge, top, announcing of transfer points net of and we closed previously focus third we the the consideration generated things the flowed was as per number operating I certain was of and in $XX.X excess expense beginning $X.XX July As with and effectively as of I start of today, National the review, key dynamics million increased million which thought the as reserves a loss by we by mentioned, a Frank from State as now well the announced by driven of The the loss are of portfolio million financials. share. additional data transaction recognized from reported $X.X as as deferred the a of impact reinsurance would adjustment on continuing comments my in the review. Coming that's and This loss the at executed out from which the previously well segment quarter. segment over million that we quarter loss loss valuation development To ceded operations reserve as July net XXXX through the in $XX.X this a some we well of detailed adjusted in $X.XX retained. our per disclosed share E&S reinsurance July connection $XX.X we transaction, gain

favorable subject million is of accounting the million, of retroactive $X.X $XX the to So the reinsurance E&S our transaction. million close effectively Admitted the the i.e., development million in This unfavorable plus segment, reserve $XXX,XXX to Specialty execution preannounced $XX.X not from July of development and we is upon the course, $XX.X segment. $XX million the

have added reserve sheet, We covers XXXX E&S The July, reinsurance the leaves to to of reinsurance this the X XX% means inclusive the previously have announced. Year-to-date, the million, $XXX reinsurance July from the we of closes, we closed to would quarter $XX million signed Once has of retain of of October transaction. second to majority so to balance casualty E&S as are that reinsurance quarter contract XX% reserves $XX which transactions. one it contract yesterday, incepts signed of and or million gross the our July retain. our in we the available development transaction, to covers the as XXXX aggregate because been us X, first and in on like XXXX, additional transaction we we we we January years year. subject yesterday which reserves reserve the pure majority This we a July ceded for cover inclusive net has corridor, $XXX million the XXXX which mentioned, the of

in closes. the from cover is in $XX.X new that flow million, the financials through which will and Enstar the transaction our quarter of cost pretax The

ultimately set cover, a a us continuing common market. changes million dividend underwriting fixed work. years, to and conversion $XX sale wholesale million to as which very the of also we very the to about we over the turning But robust payments equity. a valuable the X.X expect the of made makes opportunities X outflows, on franchise the by our with and what put E&S for we capital fixed take charge addition reduce charge issue reserves, reserve focused of and set shares last financing, in for few reduction the to set to given result common opportunities of for XX%, and last expect development to us of as outflows the well-performing in The additional currently advantage page of As opportunity robust especially of years, see is

ratios. E&S G&A about E&S. combined quarter combined and points. at reinstatement These this group the the ratio Turning There ratios. X.X addition, These points back both profitability about to X our were ratio our elevated from dynamics reserve by which were the quarter aside the and profitability specifically by expenses, impacted increased premiums and X

have XX.X% moment a has group's it our our X around is point quarter, ratio. ratio dynamics, which mentioned, we reported. ratio below the expect of closer where I expense on XX.X% the XX.X%, this year would Absent E&S which XX.X%, And XX.X% result just the ago. a have be. about For the XX% ratio been from expense would X-month to than At expense was X expense these which to been the we increased rather

income of third For year an was $XX.X energy million quarter, of we net quarter. our renewable Included increase previously final about continuing payment recorded investment or million from with investments, of operations, of income the net a $X.X $XXX,XXX investment one X.X% prior from is which sold. the in associated

into of of We during compared with X.X%. prior position to yield book book a embedded constant in yield our cash were the quarter to the embedded able Our portfolio remained at sizable portion year's high-quality quarter. invest excess assets yields our

We majority net in realized low related experienced were unrealized offset on investments, our sales on averaging values range. X% the gains of look income we common losses portfolios. of advantage to million changes market investment we to to well stock and positioned remains which the by and $X.X bank see As fair But yields yields. in attractive very portfolio, loan our forward, and continue in our take portfolio realized of overall, opportunities of attractive fixed

to the over operator for the the line questions. back that, with I'll turn So call to open

from Instructions] the first of Your line with Truist comes Hughes [Operator question Securities. Mark

have that on mentioned be then your good -- XX.X% as expense and basis? XX.X% for expectations. the had a the XX.X%. you or suggested go-forward opposed the number group you the Is to a Sarah, Was would that would XX.X% been the

Mark. would the I say XX.X%,

we've amount, that XX%. never But think dollar to that right but on that's would round specific I super been say area let's to the So about.

years? occurrence then of you've your XXXX And to tail, you is tail And been is sufficient issues pricing accident kind impact? for or liability not Yes. product extended confidence with in seen gives that taking, XXXX that, liability. the devil then be you've kind is that the the pricing, What account that other the to of going

for Mark, the thanks question. Yes,

bit to our here to detail provide little of actuaries try what a process saw relative what the Let responded DVR and we to. and me

underlying review as was change trend I what and And our actuaries assumptions. the and driving increase lines the biggest led years. accident loss us was for drew So suggested, full all assumptions in the development the need as severity methods of to really losses we and assumptions loss our total reserve did were conclusions a driver, all and reported which to both and

increasing the So across on we XX% assumptions segments. approximately our meaningfully major trend, loss increased at

to occurrence, said, by excess I occurrence, liability driven trends. been And occurrence. not are clear, liability liability severity product and other Frequency the So has as changes be these issue. GL,

the frequency with broadly, down maybe think was I one portfolio across exception.

us, promising over In actually fact, includes a we which business particular, liability our hold. few frequency are in taking last actions is believe habitational as the line for other large product occurrence, very underwriting years our which shows trends

about full process years, we year your we year with it. meaningful a and parameter same patient in point our to 'XX it's the apply recent review, redundancy more the the see because and current be to intend by definition, So also to

the the taken noted we've script, So process, taken to we've in past that in the addition not any across credit all I the the during rate as actions underwriting my for few book DVR years. in

to for years. as And more other businesses so words, didn't those better-performing are believe the what reserves in going we recent we in lower be reserves mature

of Brian with Your Meredith UBS. next question the comes from line

now on increased said XX%. trend on a you're assumptions is about your casualty you're just when a right perspective reserves follow-on to and quickly, as pricing by us give Frank, what you for? you one, Can your that trend you assuming

Yes.

good a Brian. it's question, So

a view course over of the actually our for 'XX. high got So We're in single-digit I the loss year finalizing past for this of said that process of trend quarters we've budget XXXX. think we've

able that couple But months. I'll high single again for of be another refresh view as the talk of So digit. to when in view was we you 'XX

And excess are casualty lower, space, within be lines that, course, be you'll higher. are going of certain to higher, certain the going to particularly in be lines

you. just quarter, in Any was the be on coming that reserve nothing it Got from? where had you. from came to development clear the like perspective Got And 'XX. it sounds you here

Yes. Again, it -- sure, Brian. would primarily

other prior, occurrence. business primary 'XX heavier and the the other occurrence, product primarily driver that lines some 'XX liability of liability or in excess was So occurrence. to though, the occurrence, I would say, 'XX and liability specifically, product concentration lines the liability

Got then front. you. that business just been are we that an things? going question, forward? those I'm going agreement next on of Specialty Has Admitted about had And business, into like what's curious any effect National, the thinking with State on getting business How types on

So growth in XX% the growth steady we've quarter X% there, had premium the business pretty fronting premium and in third year-to-date.

existing our to continue programs. solid from experience We growth

a will careful are number area and pipeline new of an at. security have of I contracts lines also stay commercial very think our is looking in to different tight We sure that and continue and a relative to unrated It be particularly of to making auto. cautious like our and that reinsurance tight opportunities relative we're we business participations, fairly

of very complementary 'XX. and So well it's it's the a nice business, doing course over

situation? question is in actually going Enstar with Got here. the just your anything. with agreement you. on And what's contingencies in itself involved then merger a or Enstar Any last

No, not concern. it's a

we here, shortly. close fairly expect should deal Our

executing, what there But the Brian. It's it. regulatory approval That's is just Enstar Enstar in for contingencies deal for for are the transaction. specific no

next Shields with the of Your KBW. comes question Meyer line from

accident that of could year is the trends of less years severity to the to earlier the first going the makes sort loss the reserves. recent current guess higher picks I or relevant? it back you applied clarify, hoping frequency I'm question,

these you to So We're I sure, years. year. for I I'm the issue not accident thank to just frequency, the were for current want very question. just and want you. make was comfortable it prior The sure Meyer, with make answering about

product relative the in think I frequency, to one. fact, about lines, just for all down for trends So were maybe except just

accident current of relative and more issue to the a severity not concern year. a So really

current that trends there higher already are the accident Is year severity embedded pick? because in

that's obviously compounded recent performance the again, of Yes, And also, I better monitoring, accurate. think most XX%, XX benefit the about the would quarters that actions say rate we've of I have taken, I that the underwriting all is believe. years the

all accident So year. say yes, factors influence would current I those of kind the

just pricing, as helpful. the when in That's a compared And you at the property? first of increases lines the are seeing down other decelerating of quarter Great. well? dip then third pricing to half year, the look we in Okay. that the Or function was is

No, lines. X.X% action, it around a across the say it little rate in the all say and time, would but we could X.X% casualty bump I E&S bit,

that's little because property. bump So of a additional

rate to varies to see the your cycle. excess We've over this of -- And So increases an rates continue we line in larger healthy saw just quarter, but some we fact, of acceleration over this continue strong experienced at see change in trends. business, XX%. in casualty pricing our by throughout point, To lines. we

do think think underwriters the broadly kind And the shown I over pricing over I last rate. pressures few view. of should continue that say, That's the remains the -- embolden has casualty industry I take next lines our So should to or quarters, to reserve attractive. the in environment

with Point. Compass Your question Alexander Casey comes from next

a Several how how Point of have much exactly versus for of have it a premium? the conversion conversion position, premium Can I XXX% here. more remaining XXX% few me of asked, has been but it you much Gallatin define has

XXX% the mandatory is basis it basis. of voluntary on the a on a Casey, it is of entirety entirety XXX% and

All right.

Enstar Secondly, be yesterday, -- the the will $XX.X million that believe. cost I that closed of

as a will in Or run loss that premiums? LAE be earned of fourth that quarter. So reduction net a the be And that expense? and run will run as will

yesterday. Good when approval. will it executed close was transaction That regulatory question, receives It Casey.

the with an we BMA. Enstar regulatory As regulatory the the when same situation approval BMA. This needs the from ago, that executed we I is mentioned a approval also with They needed had LPT second Fortitude.

to be but in not quarter, transaction we're the control it don't expect So know, close. we that. the We would of will when in fourth and that comes,

booked. So it be when will that's

first the that's So question.

question, second steer need the work to closing and the And that booking we're say it. through an premium, initial transaction. that but quarter booked be which quarter work would need it the the closing as accounting to additional in through we ceded is my we're our we in when would I

the same. economic It's is you the effect the know, just geography. As

Okay. was the How to dispute? adjudicating much spent on the relative quarter Fleming the

I that numbers we've quarter, those Casey. relative $X legal fairly broken -- we've de numbers fees but for under to I don't be think so out million. reported, the this It's much, minimis our are would say would it decently

Okay. fees to down the comp? get And what again, Admitted this Is specialty rate workers' an strictly can Specialty adequate year-over-year. once And you going from that on fees do forward? to due admitted? are growing Is run

Those that the actually from we segment, -- Casey. portion commissions reinsurance those that are ceding we in attribute fees a of to fees this take the Yes.

because So as we fees and well Atlas, have through. comp running have fewer less workers' we'll

probably way and the the up through the the think down -- with the GPW. segment move That's really and fees fronting to fees total So fees them. about

And write repeating I'm second didn't I the part your Would question. down mind that? you of sorry,

-- Admitted far run the it that's need driver major to is the it and get good fees this growing? does going as those a business What portion company tell. one is to I Specialty forward do can the of as what was rate from profit Obviously,

the very been the right. to kind part top but that they for the back my line grows. has cadence. the deals business and first us, lumpy fees bespoke in there been will go it. on of saying would answer are of I always has stable, that key some I degree, their That's off, grows would business And business but in come transactional a to grow the performance go as meaning fairly That's say and and deals certainly, fairly of

see transaction we time, certainly are but would they over and focused. So increase bespoke those expect to

now back D'Orazio I over Frank to remarks. for call will the turn closing

Okay. Thank you.

under continues circumstances. both today, call employees. retention River like we and a regionally I'd and prolonged the been trying am in the company the proud resolve high, on of very moment our of the its as a execute to And has This to top despite end process resilient, those accomplishments as future. and I we corporate our has the take company Before recognized a remains remained and recognize James staff be to to continue employer objectives. confident nationally company's challenges,

like again rest questions received this for you I'd Okay. today in time for we your months. you speak of morning. a the to few day. all and your to We'll Enjoy thank the

Ladies that all joining. Thank and you gentlemen, concludes today's call. for

You may disconnect. now