James River Announces Third Quarter 2022 Results

PEMBROKE, Bermuda, Nov. 01, 2022 (GLOBE NEWSWIRE) — James River Group Holdings, Ltd. (“James River” or the “Company”) (NASDAQ: JRVR) at the moment reported a 3rd quarter 2022 web loss out there to frequent shareholders of $7.2 million ($0.19 per diluted share), in comparison with a web loss out there to frequent shareholders of $23.9 million ($0.64 per diluted share) for the third quarter of 2021. Adjusted web working earnings¹ for the third quarter of 2022 was $15.5 million ($0.41 per diluted share), in comparison with an adjusted web working loss¹ of $26.8 million ($0.72 per diluted share) for the third quarter of 2021.

Highlights for the quarter included:

• Third quarter 2022 Group mixed ratio of 94.1% on business not topic to retroactive reinsurance accounting for loss portfolio transfers (“combined ratio”), and 91.5% excluding the affect of disaster losses; adjusted web working return on tangible frequent fairness¹ of 17.5%. Unless specified in any other case, all underwriting efficiency ratios introduced herein are for our business not topic to retroactive reinsurance accounting for loss portfolio transfers.
• Excess and Surplus Lines (“E&S”) section mixed ratio of 88.2%, and 84.6% excluding the affect of disaster losses.
• As a results of adversarial growth on the reserves topic to the industrial auto loss portfolio switch settlement (“Commercial Auto LPT”), retroactive reinsurance accounting remedy ends in a web loss for the quarter. However, the Company acknowledged a considerable profit within the quarter from the Commercial Auto LPT, which supplies limitless protection of adversarial growth on the portfolio.
• Net written premium progress of 20.3% because of elevated web retention within the E&S section; E&S renewal pricing elevated 8.4%, largely unchanged from the rise in renewal pricing of the identical quarter final 12 months.
• Net disaster losses associated to Hurricane Ian of $5.0 million, or 2.6 proportion factors on the Group loss ratio.
• Net funding earnings elevated 17.7% sequentially in comparison with the second quarter of 2022.
• Year thus far mixed ratio of 94.2% and adjusted web working return on tangible frequent fairness¹ of 16.0%.

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¹ Adjusted web working earnings (loss) and adjusted web working return on tangible frequent fairness are non-GAAP monetary measures. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” on the finish of this press launch.

² Tangible fairness is a non-GAAP monetary measure. See “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” on the finish of this press launch.

Frank D’Orazio, the Company’s Chief Executive Officer, commented, “During the third quarter of 2022 we continued to demonstrate our focus on disciplined underwriting and consistent performance, with all segments reporting an underwriting profit. E&S renewal rate increases remain strong and in excess of our view of loss trend. While we took proactive underwriting actions on discrete elements of our portfolio where renewal pricing did not meet our appetite, we continued to benefit from ample opportunities and robust market conditions overall as policy count grew by 7.3% and we increased our net retention in E&S by ten percentage points. Additionally, our results validate our heightened focus on risk management and highlight the value of recent strategic actions as we had modest exposure to Hurricane Ian and benefited from the legacy commercial auto loss portfolio transfer that we executed last year. The results of these combined actions produced a very attractive adjusted net operating return on tangible common equity of 17.5% in the quarter.”

Third Quarter 2022 Operating Results

• Gross written premium of $358.5 million, consisting of the next:

• Net written premium of $190.3 million, consisting of the next:

• Net earned premium of $190.2 million, consisting of the next:

• E&S gross written premium decreased 5.9% in comparison with the prior 12 months quarter, whereas web written premium elevated 10.2% because of greater web retention. The decline was pushed by discrete actions taken on renewal business that didn’t meet our urge for food. Renewal charge will increase had been 8.4% through the third quarter of 2022, representing the twenty-third consecutive quarter of renewal charge will increase compounding to 61.5%. On a 12 months thus far foundation, E&S gross written premium has elevated 10.2% with most underwriting divisions experiencing double digit progress.
• Gross written premium for the Specialty Admitted Insurance section elevated 1.8% from the prior 12 months quarter. During the quarter there was a mixed 4.0% discount to premium from our particular person danger staff’ compensation business and our massive staff’ compensation fronted program. The remaining section premium elevated 5.1% regardless of the lack of a fronting accomplice that was acquired on the finish of 2021.
• Gross written premium within the Casualty Reinsurance section elevated considerably in comparison with the prior 12 months quarter primarily pushed by premium changes and a timing distinction with one renewal and extension. On a 12 months thus far foundation, gross premium has declined 37.6% and we stay on monitor to cut back gross premium by roughly $100 million throughout 2022. Since the incomes patterns of the business can lengthen over a number of years, adjustments in web earned premium for this section will lag the anticipated decline in gross and web written premium.
• Pre-tax favorable (unfavorable) reserve growth by section on business not topic to retroactive reinsurance accounting for loss portfolio transfers was as follows:

• During the third quarter of 2022, because of adversarial paid loss developments on the legacy industrial auto portfolio, the Company acknowledged adversarial prior 12 months growth of $46.7 million on the reserves topic to the Commercial Auto LPT. Because the reserves had been absolutely topic to the settlement that gives limitless protection, the Company doesn’t anticipate any financial affect from this growth. The Company recorded a retroactive reinsurance good thing about $25.9 million in loss and loss adjustment bills and a deferred retroactive reinsurance acquire of $20.8 million on the Balance Sheet.
• Net disaster losses associated to Hurricane Ian had been $5.0 million, or 2.6 proportion factors on the Group loss ratio. The losses had been primarily associated to the Excess Property underwriting division within the E&S section. Because the Company purchases vital property disaster reinsurance, it doesn’t anticipate further web disaster losses from occasions through the quarter.
• Gross price earnings was as follows:

• The consolidated expense ratio was 24.6% for the third quarter of 2022, largely unchanged from 24.8% within the prior 12 months third quarter. The expense ratio benefited from 11.5% progress in web earned premium and 5.5% progress in price earnings, whereas underwriting bills elevated at a barely decrease charge.

Investment Results

Net funding earnings for the third quarter of 2022 was $17.3 million, a rise of 13.2% in comparison with $15.3 million for a similar interval in 2021. Income from mounted maturities and equities elevated because of greater yields and progress within the portfolio, whereas earnings from renewable power and different personal investments declined from the prior 12 months interval primarily because of market volatility. Growth in earnings from mounted maturities, financial institution loans and equities elevated 31.0% in comparison with the prior 12 months interval and 16.7% in comparison with the second quarter of 2022.

The Company’s web funding earnings consisted of the next:

The Company’s annualized gross funding yield on common mounted maturity, financial institution mortgage and fairness securities for the three months ended September 30, 2022 was 3.6% (versus 2.8% for the three months ended September 30, 2021). The funding yield elevated primarily on account of greater market yields on mounted maturity securities and financial institution loans.

Net realized and unrealized losses on investments of $7.8 million for the three months ended September 30, 2022 compares to web realized and unrealized beneficial properties on investments of $4.0 million within the prior 12 months quarter. The majority of the realized and unrealized losses through the third quarter of 2022 had been associated to adjustments in truthful values of our most popular and customary fairness securities and, to a lesser extent, our secured financial institution mortgage portfolio.

Taxes

Generally the Company’s efficient tax charge fluctuates from interval to interval primarily based on the relative mixture of earnings reported by nation and the respective tax charges imposed by every tax jurisdiction. The tax charge for the 9 months ended September 30, 2022 was 30.9%. The tax charge is impacted by the geographic mixture of earnings.

Tangible Equity

Tangible fairness² of $474.9 million at September 30, 2022 declined 9.0% in comparison with tangible fairness of $521.6 million at June 30, 2022, because of a rise in unrealized losses within the Company’s mounted maturity portfolio. Accumulated different complete (loss) earnings (“AOCI”) declined by $60.7 million through the third quarter of 2022, with greater rates of interest driving a decline within the worth of the Company’s mounted maturity securities. Tangible fairness excluding AOCI was $650.1 million at September 30, 2022 in comparison with $477.5 million at December 31, 2021, with the rise pushed by proceeds from the Series A most popular shares issued through the first quarter of 2022 and constructive web earnings out there to frequent shareholders.

Capital Management

The Company introduced that its Board of Directors declared a money dividend of $0.05 per frequent share. This dividend is payable on Friday, December 30, 2022 to all shareholders of report on Monday, December 12, 2022.

Conference Call

James River will maintain a convention name to debate its third quarter outcomes tomorrow, November 2, 2022 at 8:00 a.m. Eastern Time. Investors might entry the convention name by dialing (800) 715-9871, Conference ID 2262462, or by way of the web by visiting www.jrvrgroup.com and clicking on the “Investor Relations” hyperlink. A webcast replay of the decision shall be out there by visiting the corporate web site.

Forward-Looking Statements

This press launch accommodates forward-looking statements as that time period is outlined within the Private Securities Litigation Reform Act of 1995. In some circumstances, such forward-looking statements could also be recognized by phrases corresponding to imagine, anticipate, search, might, will, ought to, intend, challenge, anticipate, plan, estimate, steering or related phrases. Forward-looking statements contain dangers and uncertainties that might trigger precise outcomes to vary materially from these within the forward-looking statements. Although it’s not potential to establish all of those dangers and uncertainties, they embody, amongst others, the next: the inherent uncertainty of estimating reserves and the chance that incurred losses could also be higher than our loss and loss adjustment expense reserves; inaccurate estimates and judgments in our danger administration might expose us to higher dangers than meant; downgrades within the monetary power score of our regulated insurance subsidiaries impacting our means to draw and retain insurance and reinsurance business that our subsidiaries write, our aggressive place, and our monetary situation; the potential lack of key members of our administration workforce or key workers and our means to draw and retain personnel; adversarial financial components ensuing within the sale of fewer insurance policies than anticipated or a rise within the frequency or severity of claims, or each; the affect of a persistent excessive inflationary setting on our reserves, the values of our funding returns, and on our compensation bills; publicity to credit score danger, rate of interest danger and different market danger in our funding portfolio; reliance on a choose group of brokers and brokers for a good portion of our business and the affect of our potential failure to take care of such relationships; reliance on a choose group of shoppers for a good portion of our business and the affect of our potential failure to take care of, or determination to terminate, such relationships; our means to acquire reinsurance protection at costs and on phrases that permit us to switch danger and adequately shield our firm in opposition to monetary loss; losses ensuing from reinsurance counterparties failing to pay us on reinsurance claims, insurance firms with whom we now have a fronting association failing to pay us for claims, or a former buyer with whom we now have an indemnification association failing to carry out its reimbursement obligations, and our potential incapability to demand or keep enough collateral to mitigate such dangers; inadequacy of premiums we cost to compensate us for our losses incurred; adjustments in legal guidelines or authorities regulation, together with tax or insurance regulation and rules; the continuing impact of Public Law No. 115-97, informally titled the Tax Cuts and Jobs Act, which can have a big impact on us together with, amongst different issues, by probably rising our tax charge, in addition to on our shareholders; within the occasion we don’t qualify for the insurance firm exception to the passive international funding firm (“PFIC”) guidelines and are subsequently thought-about a PFIC, there might be materials adversarial tax penalties to an investor that’s topic to U.S. federal earnings taxation; the Company or any of its international subsidiaries changing into topic to U.S. federal earnings taxation; a failure of any of the loss limitations or exclusions we make the most of to protect us from unanticipated monetary losses or authorized exposures, or different liabilities; losses from catastrophic occasions, corresponding to pure disasters and terrorist acts, which considerably exceed our expectations and/or exceed the quantity of reinsurance we now have bought to guard us from such occasions; the results of the COVID-19 pandemic and related authorities actions on our operations and monetary efficiency; potential results on our business of rising declare and protection points; the potential affect of inside or exterior fraud, operational errors, programs malfunctions or cyber safety incidents; our means to handle our progress successfully; failure to take care of efficient inside controls in accordance with Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”); and adjustments in our monetary situation, rules or different components which will limit our subsidiaries’ means to pay us dividends. Additional details about these dangers and uncertainties, in addition to others which will trigger precise outcomes to vary materially from these within the forward-looking statements, is contained in our filings with the U.S. Securities and Exchange Commission (“SEC”), together with our most not too long ago filed Annual Report on Form 10-Okay. These forward-looking statements converse solely as of the date of this launch and the Company doesn’t undertake any obligation to replace or revise any forward-looking info to mirror adjustments in assumptions, the incidence of unanticipated occasions, or in any other case.

Non-GAAP Financial Measures

In presenting James River Group Holdings, Ltd.’s outcomes, administration has included monetary measures that aren’t calculated below requirements or guidelines that comprise accounting rules typically accepted within the United States (“GAAP”). Such measures, together with underwriting revenue (loss), adjusted web working earnings (loss), tangible fairness, tangible frequent fairness, adjusted web working return on tangible fairness (which is calculated as annualized adjusted web working earnings (loss) divided by the common quarterly tangible fairness balances within the respective interval), and adjusted web working return on tangible frequent fairness (which is calculated as annualized adjusted web working earnings (loss) divided by the common quarterly tangible frequent fairness balances within the respective interval), are known as non-GAAP measures. These non-GAAP measures could also be outlined or calculated otherwise by different firms. These measures shouldn’t be seen as an alternative to these measures decided in accordance with GAAP. Reconciliations of such measures to probably the most comparable GAAP figures are included on the finish of this press launch.

About James River Group Holdings, Ltd.

James River Group Holdings, Ltd. is a Bermuda-based insurance holding firm that owns and operates a gaggle of specialty insurance and reinsurance firms. 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 internet at www.jrvrgroup.com. 

For extra info contact:

Brett Shirreffs
SVP, Finance, Investments and Investor Relations
[email protected] 

James River Group Holdings, Ltd. and Subsidiaries
Condensed Consolidated Balance Sheet Data
(Unaudited)

James River Group Holdings, Ltd. and Subsidiaries
Condensed Consolidated Income (Loss) Statement Data
(Unaudited)

James River Group Holdings, Ltd. and Subsidiaries
Segment Results

EXCESS AND SURPLUS LINES

SPECIALTY ADMITTED INSURANCE

CASUALTY REINSURANCE

Underwriting Performance Ratios

The following desk supplies the underwriting efficiency ratios of the Company inclusive of the business topic to retroactive reinsurance accounting for loss portfolio transfers. There isn’t any financial affect to the Company over the lifetime of a loss portfolio switch contract as long as any further losses topic to the contract are throughout the restrict of the loss portfolio switch and the counterparty performs below the contract. Retroactive reinsurance accounting shouldn’t be indicative of our present and ongoing operations. Management believes that offering loss ratios and mixed ratios on business not topic to retroactive reinsurance accounting for loss portfolio transfers offers the customers of our monetary statements helpful info in evaluating our present and ongoing operations.

RECONCILIATION OF NON-GAAP MEASURES

Underwriting Profit

The following desk reconciles the underwriting revenue by particular person working section and for your entire Company to consolidated earnings earlier than taxes. We imagine that the disclosure of underwriting revenue by particular person section and of the Company as a complete is helpful to traders, analysts, score businesses and different customers of our monetary info in evaluating our efficiency as a result of our goal is to constantly earn underwriting income. We consider the efficiency of our segments and allocate assets primarily based totally on underwriting revenue. We outline underwriting revenue as web earned premiums and gross price earnings (in particular situations when the Company shouldn’t be retaining insurance danger) much less losses and loss adjustment bills excluding the affect of loss portfolio transfers accounted for as retroactive reinsurance and different working bills. Other working bills embody the underwriting, acquisition, and insurance bills of the working segments and, for consolidated underwriting revenue, the bills of the Corporate and Other section. Our definition of underwriting revenue is probably not corresponding to that of different firms.

Adjusted Net Operating Income

We outline adjusted web working earnings as earnings out there to frequent shareholders excluding a) the affect of loss portfolio transfers accounted for as retroactive reinsurance, b) web realized and unrealized beneficial properties (losses) on investments, c) sure non-operating bills corresponding to skilled service charges associated to a purported class motion lawsuit, varied strategic initiatives, and the submitting of registration statements for the providing of securities, and d) severance prices related to terminated workers. We use adjusted web working earnings as an inside efficiency measure within the administration of our operations as a result of we imagine it offers our administration and different customers of our monetary info helpful perception into our outcomes of operations and our underlying business efficiency. Adjusted web working earnings shouldn’t be seen as an alternative to web earnings calculated in accordance with GAAP, and our definition of adjusted web working earnings is probably not corresponding to that of different firms.

Our earnings (loss) out there to frequent shareholders reconciles to our adjusted web working earnings (loss) as follows:

Tangible Equity (per Share) and Tangible Common Equity (per Share)

We outline tangible fairness as shareholders’ fairness plus mezzanine Series A most popular shares and the unrecognized deferred retroactive reinsurance acquire on loss portfolio transfers much less goodwill and intangible property (web of amortization). We outline tangible frequent fairness as tangible fairness much less mezzanine Series A most popular shares. Our definition of tangible fairness and tangible frequent fairness is probably not corresponding to that of different firms, and it shouldn’t be seen as an alternative to shareholders’ fairness calculated in accordance with GAAP. We use tangible fairness and tangible frequent fairness internally to guage the power of our steadiness sheet and to match returns relative to this measure. The following desk reconciles shareholders’ fairness to tangible fairness and tangible frequent fairness for September 30, 2022, June 30, 2022, and December 31, 2021.