James River Group Holdings, Ltd. (NASDAQ:JRVR) Q4 2023 Results Conference Call February 29, 2024 8:30 AM ET Company Participants Brett Shirreffs - Head-Investor Relations Frank D’Orazio - Chief Executive Officer Sarah Doran - Chief Financial Officer Conference Call Participants Mark Hughes - Truist Brian Meredith - UBS Meyer Shields - KBW Operator Good morning. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to James River Group Fourth Quarter 2 ...

TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-36777 JAMES RIVER GROUP HOLDINGS, LTD. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organiza ...

Exhibit 99.1 JAMES RIVER ANNOUNCES FOURTH QUARTER 2023 RESULTS Pembroke, Bermuda, February 28, 2024 - James River Group Holdings, Ltd. ("James River" or the "Company") (NASDAQ: JRVR) today reported the following results for the fourth quarter 2023 as compared to the same period in 2022: | | Three Months Ended | | | | Three Months Ended | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | December 31, | | | | December 31, | | | | | ($ in thousands, except for share data) | 2023 per diluted sha ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents James River Group Holdings, Ltd.'s unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2023, detailing financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $5.19 billion, driven by cash and reinsurance recoverables, while liabilities rose to $4.49 billion, primarily due to higher loss reserves Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Invested Assets | $2,189,522 | $2,192,294 | | Cash and cash equivalents | $232,923 | $173,164 | | Total Assets | $5,193,487 | $5,137,075 | | Reserve for losses and loss adjustment expenses | $2,887,352 | $2,768,995 | | Total Liabilities | $4,486,045 | $4,438,411 | | Total Shareholders' Equity | $562,544 | $553,766 | [Condensed Consolidated Statements of Income (Loss) and Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20(Loss)%20Income) Net income available to common shareholders significantly improved to $16.9 million in Q3 2023 and $34.6 million for the nine months, driven by higher investment income Q3 2023 vs Q3 2022 Performance (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net Earned Premiums | $202,625 | $190,189 | | Total Revenues | $233,427 | $201,229 | | Losses and loss adjustment expenses | $139,171 | $153,008 | | Net Income (Loss) | $19,551 | $(4,621) | | Net Income (Loss) available to common shareholders | $16,926 | $(7,246) | | Diluted EPS | $0.45 | $(0.19) | Nine Months 2023 vs 2022 Performance (in thousands, except per share data) | Metric | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | | Net Earned Premiums | $608,075 | $566,275 | | Total Revenues | $695,149 | $587,983 | | Losses and loss adjustment expenses | $435,767 | $409,985 | | Net Income (Loss) | $42,471 | $13,248 | | Net Income (Loss) available to common shareholders | $34,596 | $7,123 | | Diluted EPS | $0.91 | $0.19 | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased to $562.5 million, primarily due to net income, partially offset by comprehensive loss and dividends paid - For the nine months ended September 30, 2023, total shareholders' equity increased by **$8.7 million**. Key changes include a **$42.5 million** net income contribution, offset by a **$25.8 million** other comprehensive loss and **$13.6 million** in total dividends paid[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $97.8 million, while cash used in investing activities significantly reduced, and financing activities shifted to a net cash outflow Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $97,751 | $168,129 | | Net cash used in investing activities | $(18,016) | $(262,181) | | Net cash (used in) provided by financing activities | $(16,333) | $91,953 | | Change in cash, cash equivalents, and restricted cash | $63,402 | $(2,099) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, investment portfolio, loss reserves, and segment information, highlighting the sale of IRWC renewal rights, adverse reserve development, and the announced sale of JRG Re - On September 29, 2023, the company sold the renewal rights to its Individual Risk Workers’ Compensation (IRWC) business, recognizing a **$2.2 million** gain on sale and a **$2.5 million** impairment charge on the associated trademark[61](index=61&type=chunk)[97](index=97&type=chunk) - For Q3 2023, the company experienced **$12.5 million** of net adverse reserve development, primarily from the Excess and Surplus Lines (**$7.8 million**) and Casualty Reinsurance (**$4.7 million**) segments[68](index=68&type=chunk) - Subsequent to the quarter end, on November 8, 2023, the company agreed to sell its JRG Reinsurance Company Ltd. subsidiary to Fleming Intermediate Holdings LLC for total consideration of approximately **$277 million**[151](index=151&type=chunk)[152](index=152&type=chunk) - On November 10, 2023, the Board of Directors initiated an exploration of strategic alternatives, which could include a sale, merger, or other strategic transaction[154](index=154&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, strategic actions including the JRG Re sale, and operational results, highlighting adjusted net operating income, segment performance, and liquidity - The company has undertaken significant strategic actions, including suspending new business in the Casualty Reinsurance segment, non-renewing a large California workers' compensation program, and selling the renewal rights to its Individual Risk Workers' Compensation (IRWC) business[177](index=177&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) - On November 8, 2023, the company entered into a definitive agreement to sell its Casualty Reinsurance subsidiary, JRG Re[178](index=178&type=chunk) - On November 10, 2023, the company announced its board has initiated an exploration of strategic alternatives, including a potential sale or merger[176](index=176&type=chunk) Key Performance Metrics (Three Months Ended Sep 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Gross Written Premiums | $342.5M | $358.5M | | Net Earned Premiums | $202.6M | $190.2M | | Underwriting Profit (Non-GAAP) | $7.6M | $11.3M | | Adjusted Net Operating Income (Non-GAAP) | $18.3M | $15.5M | | Combined Ratio | 96.2% | 94.1% | [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Adjusted net operating income increased to $18.3 million in Q3 2023, driven by higher net investment income despite a higher combined ratio of 96.2% - Q3 2023 underwriting profit was **$7.6 million** (**96.2%** combined ratio) compared to **$11.3 million** (**94.1%** combined ratio) in Q3 2022[185](index=185&type=chunk) - The Q3 2023 loss ratio decreased to **68.6%** from **69.5%**, but this was offset by an increased expense ratio of **27.6%** (up from **24.6%**). The quarter included **$12.5 million** (**6.2 points**) of adverse prior-year reserve development[186](index=186&type=chunk) - Net investment income for Q3 2023 grew **52.0%** to **$26.3 million**, driven by higher yields on fixed maturities, bank loans, and cash equivalents due to rising interest rates[182](index=182&type=chunk)[187](index=187&type=chunk) [Premiums](index=41&type=section&id=Premiums) Gross written premiums decreased 4.5% to $342.5 million in Q3 2023, with E&S segment growth offset by declines in Casualty Reinsurance and strategic exits Gross Written Premiums by Segment (Q3 2023 vs Q3 2022, in thousands) | Segment | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Excess and Surplus Lines | $217,151 | $204,785 | 6.0% | | Specialty Admitted Insurance | $125,700 | $123,389 | 1.9% | | Casualty Reinsurance | $(348) | $30,331 | N/A | | **Total** | **$342,503** | **$358,505** | **(4.5)%** | - E&S segment growth was driven by a **10.3%** increase in Core E&S divisions, particularly General Casualty (**+42.1%**) and Manufacturers & Contractors (**+8.8%**), while Commercial Auto declined **43.7%**[204](index=204&type=chunk) - The company is strategically exiting certain workers' compensation lines, having non-renewed its large California program and sold the renewal rights to its Individual Risk Workers' Compensation (IRWC) business. These lines represented **10.1%** of consolidated GWP for the first nine months of 2023[206](index=206&type=chunk) [Segment Results](index=44&type=section&id=Segment%20Results) E&S segment maintained an 88.4% combined ratio, Specialty Admitted improved to 92.5%, while Casualty Reinsurance reported a 122.2% combined ratio due to adverse development Combined Ratio by Segment (Q3 2023 vs Q3 2022) | Segment | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Excess and Surplus Lines | 88.4% | 88.2% | | Specialty Admitted Insurance | 92.5% | 98.4% | | Casualty Reinsurance | 122.2% | 90.9% | | **Total** | **96.2%** | **94.1%** | - The E&S segment's Q3 results included **$7.8 million** (**5.0 points**) of adverse prior-year reserve development in its General Casualty line[214](index=214&type=chunk) - The Specialty Admitted segment's improved profitability was due to a lower accident year loss ratio (**77.8%** vs **93.4%**) from a better business mix and improved loss trends[218](index=218&type=chunk)[219](index=219&type=chunk) [Investing Results](index=47&type=section&id=Investing%20Results) Net investment income increased 52% to $26.3 million, driven by higher yields in a rising interest rate environment, with the portfolio maintaining high quality Net Investment Income by Source (Q3 2023 vs Q3 2022, in thousands) | Source | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Fixed maturity securities | $17,166 | $12,267 | | Bank loan participations | $4,276 | $3,370 | | Cash, equivalents & short-term | $4,085 | $1,687 | | Other | $1,808 | $966 | | **Gross Investment Income** | **$27,335** | **$18,290** | - The fixed maturity portfolio, valued at **$1.84 billion**, is primarily composed of State/Municipal (**17.6%**), Residential mortgage-backed (**22.7%**), and Corporate (**39.2%**) securities[231](index=231&type=chunk) - **91.1%** of the fixed maturity portfolio is rated 'A' or better by S&P or an equivalent agency[231](index=231&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains adequate liquidity with $94.1 million cash from operations, a $315.0 million credit facility, and a leverage ratio of 22.1% - Cash provided by operating activities was **$94.1 million** for the nine months ended Sep 30, 2023, down from **$167.6 million** in the prior year, mainly due to the suspension of underwriting in the Casualty Reinsurance segment[242](index=242&type=chunk) - The company's leverage ratio was **22.1%** as of September 30, 2023, comfortably below the **35.0%** limit required by its senior credit agreements[260](index=260&type=chunk) - The company maintains significant reinsurance protection, including a property catastrophe treaty providing **$20.0 million** of coverage, which would require an event greater than a 1-in-1,000 year PML to exhaust[263](index=263&type=chunk)[267](index=267&type=chunk) [Reconciliation of Non-GAAP Measures](index=59&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section reconciles non-GAAP measures such as Underwriting Profit, Adjusted Net Operating Income, and Tangible Equity to their most comparable GAAP measures Reconciliation of Net Income to Adjusted Net Operating Income (Q3 2023, in thousands) | Description | Amount | | :--- | :--- | | **Income available to common shareholders** | **$16,926** | | Losses and loss adjustment expenses - retroactive reinsurance | $750 | | Net realized and unrealized investment (gains) losses | $(212) | | Other (income) expenses | $(1,133) | | Impairment of intangible assets | $1,975 | | **Adjusted net operating income** | **$18,306** | Reconciliation of Shareholders' Equity to Tangible Equity (as of Sep 30, 2023, in thousands) | Description | Amount | | :--- | :--- | | **Shareholders' equity** | **$562,544** | | Add: Series A redeemable preferred shares | $144,898 | | Add: Deferred reinsurance gain | $37,653 | | Less: Goodwill | $(181,831) | | Less: Intangible assets, net | $(32,904) | | **Tangible equity** | **$530,360** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and equity price risks, with no material changes reported since the 2022 Annual Report - The company's main market risks are interest rate risk from fixed maturity investments and equity price risk. There have been no material changes in these risks since the year-end 2022 report[300](index=300&type=chunk)[301](index=301&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to an unremediated material weakness in internal control over financial reporting, leading to a Q2 2023 restatement - The CEO and CFO concluded that disclosure controls and procedures were not effective as of September 30, 2023[303](index=303&type=chunk) - A material weakness was identified in internal control over financial reporting because controls failed to detect a material misstatement related to unrecorded reinstatement premium in the Q2 2023 financials[304](index=304&type=chunk)[306](index=306&type=chunk) - A remediation plan has been initiated, which includes implementing additional review procedures, training accounting personnel, and enhancing process documentation[307](index=307&type=chunk) [PART II. OTHER INFORMATION](index=63&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company faces two purported class action lawsuits concerning alleged inadequate reserve disclosures for Rasier LLC and ineffective internal controls over reinsurance premiums - A purported class action lawsuit filed in July 2021 alleges inadequate disclosures regarding reserves for policies covering Rasier LLC (an Uber subsidiary). The company's motion to dismiss was denied, and discovery is underway[312](index=312&type=chunk) - A new purported class action lawsuit was filed on November 13, 2023, alleging failure to disclose ineffective internal controls related to the recognition of reinstatement premiums for reinsurance[313](index=313&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) New risk factors include a material weakness in internal controls, risks associated with the pending JRG Re sale, and uncertainties from the exploration of strategic alternatives - A new risk factor is the identified material weakness in internal controls, which could adversely affect the ability to accurately report financial results[314](index=314&type=chunk) - The pending sale of JRG Re is subject to risks, including failure to meet closing conditions (like regulatory approval) and the fact that a portion of the consideration (**$139 million**) is a pre-closing dividend subject to asset availability[315](index=315&type=chunk)[316](index=316&type=chunk) - The exploration of strategic alternatives creates uncertainty that could adversely affect the business, including employee and customer retention[318](index=318&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None [Item 3. Defaults Upon Senior Securities](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None [Item 4. Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed under this item - None [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Stock Purchase Agreement for JRG Re sale and the Third Amended and Restated Credit Agreement - Key exhibits include the Stock Purchase Agreement for the sale of JRG Re and the Third Amended and Restated Credit Agreement from July 2023[322](index=322&type=chunk)

James River Group Holdings, Ltd. (NASDAQ:JRVR) Q3 2023 Earnings Conference Call November 8, 2023 8:30 AM ET Company Participants Brett Shirreffs – Head-Investor Relations Frank D’Orazio – Chief Executive Officer Sarah Doran – Chief Financial Officer Conference Call Participants Mark Hughes – Truist Matt Carletti – JMP Securities Tracy Benguigui – Barclays Brian Meredith – UBS Meyer Shields – KBW Casey Alexander – Compass Point Operator Welcome, everyone, to the James River Group Quarter Three 2023 Earnings ...

James River Group Holdings, Ltd. (NASDAQ:JRVR) Q2 2023 Earnings Conference Call August 8, 2023 8:30 AM ET Company Participants Frank D’Orazio - Chief Executive Officer Sarah Doran - Chief Financial Officer Brett Shirreffs - Investor Relations Conference Call Participants Mark Hughes - Truist Securities Meyer Shields - KBW Tracy Benguigui - Barclays Brian Meredith - UBS Operator Good morning, ladies and gentlemen, and welcome to the James River Group Q2, 2023 Earnings Call. I would now like to introduce you ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements show an increase in total assets to $5.30 billion as of June 30, 2023, from $5.14 billion at year-end 2022, with total shareholders' equity also rising to $595.9 million from $553.8 million, while net income available to common shareholders significantly increased to $28.1 million from $14.4 million in the prior-year period, driven by higher net earned premiums and net investment income, though cash flow from operations decreased to $42.6 million from $139.3 million in the same period of 2022 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets increased to $5.30 billion from $5.14 billion at December 31, 2022, primarily driven by increases in reinsurance recoverables and premiums receivable, while total liabilities grew to $4.56 billion from $4.44 billion, mainly due to a higher reserve for losses and loss adjustment expenses, and total shareholders' equity increased to $595.9 million from $553.8 million over the same period Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$5,295,870** | **$5,137,075** | | Total Invested Assets | $2,187,116 | $2,192,294 | | Reinsurance recoverable on unpaid losses, net | $1,545,736 | $1,520,113 | | **Total Liabilities** | **$4,555,049** | **$4,438,411** | | Reserve for losses and loss adjustment expenses | $2,885,379 | $2,768,995 | | Senior debt | $222,300 | $222,300 | | **Total Shareholders' Equity** | **$595,923** | **$553,766** | [Condensed Consolidated Statements of Income and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20%28Loss%29) For the six months ended June 30, 2023, the company reported net income available to common shareholders of $28.1 million, a significant increase from $14.4 million in the same period of 2022, driven by an 11.1% increase in net earned premiums to $417.8 million and a 64.5% rise in net investment income to $50.9 million, resulting in total comprehensive income of $47.7 million, a substantial turnaround from a loss of $126.7 million in the prior-year period, which was heavily impacted by unrealized investment losses Financial Performance Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Gross Written Premiums | $791,634 | $759,650 | | Net Earned Premiums | $417,771 | $376,086 | | Net Investment Income | $50,947 | $30,972 | | **Net Income Available to Common Shareholders** | **$28,051** | **$14,369** | | Diluted EPS | $0.74 | $0.38 | | Total Comprehensive Income (Loss) | $47,746 | $(126,702) | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity increased from $553.8 million at December 31, 2022, to $595.9 million at June 30, 2023, primarily due to net income of $33.3 million and other comprehensive income of $14.4 million from unrealized gains on investments, partially offset by dividends on common and preferred shares totaling $9.1 million - For the six months ended June 30, 2023, total shareholders' equity increased by **$42.2 million**[22](index=22&type=chunk) - Key drivers of the equity increase were net income (**$33.3M**) and other comprehensive income (**$14.4M**), offset by dividends on preferred shares (**$5.3M**) and common shares (**$3.8M**)[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, net cash provided by operating activities was $42.6 million, a decrease from $139.3 million in the prior-year period, while net cash provided by investing activities was $27.1 million, a reversal from $75.1 million used in the same period of 2022, and net cash used in financing activities was $13.3 million, compared to $96.5 million provided in the prior-year period, which had included proceeds from the issuance of Series A preferred shares Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $42,621 | $139,321 | | Net cash provided by (used in) investing activities | $27,070 | $(75,060) | | Net cash (used in) provided by financing activities | $(13,329) | $96,450 | | **Change in cash, cash equivalents, and restricted cash** | **$56,362** | **$160,711** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, investment portfolio composition, loss reserve development, segment performance, and capital structure, highlighting the significant impact of two loss portfolio transfers (LPTs) on reserves and earnings, the issuance of Series A Preferred Shares, and ongoing legal proceedings, with the investment portfolio primarily composed of investment-grade fixed maturity securities, and the company having suspended underwriting in its Casualty Reinsurance segment [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a **24.3%** increase in adjusted net operating income to **$42.1 million** for the first six months of 2023, driven by strong investment income growth, with gross written premiums growing **4.2%** to **$791.6 million**, led by the Excess and Surplus Lines segment, and the company suspending underwriting in its Casualty Reinsurance segment to focus on higher-returning U.S. businesses, while detailing the significant accounting impacts of two large Loss Portfolio Transfers (LPTs) and discussing liquidity, capital resources, and ceded reinsurance programs - For the six months ended June 30, 2023, adjusted net operating income increased **24.3%** to **$42.1 million**, compared to **$33.9 million** in the prior year period[176](index=176&type=chunk)[179](index=179&type=chunk) - The company has suspended writing new business in its Casualty Reinsurance segment to focus on its more profitable U.S. insurance businesses[168](index=168&type=chunk) - The company's performance was significantly affected by two Loss Portfolio Transfers (LPTs), the Commercial Auto LPT and the Casualty Re LPT, which required retroactive reinsurance accounting and resulted in a net impact of **$17.5 million** to losses and loss adjustment expenses for the six months ended June 30, 2023[184](index=184&type=chunk)[186](index=186&type=chunk) [Results of Operations](index=37&type=section&id=RESULTS%20OF%20OPERATIONS) For the six months ended June 30, 2023, net income available to common shareholders was $28.1 million, up from $14.4 million year-over-year, with the consolidated combined ratio at 94.7%, slightly higher than 94.2% in the prior year, and the improvement in net income largely driven by a 64.5% increase in net investment income to $50.9 million, which offset higher interest expenses and a slight decrease in underwriting profit, with results also impacted by retroactive reinsurance accounting related to two loss portfolio transfers Consolidated Results Summary (Six Months Ended June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Gross Written Premiums | $791.6M | $759.7M | | Net Earned Premiums | $417.8M | $376.1M | | Underwriting Profit | $21.9M | $21.7M | | Net Investment Income | $50.9M | $31.0M | | Net Income Available to Common Shareholders | $28.1M | $14.4M | | Combined Ratio | 94.7% | 94.2% | [Segment Results](index=42&type=section&id=Segment%20Results) For the first six months of 2023, the Excess and Surplus Lines segment's underwriting profit was $39.4 million with a combined ratio of 87.3%, while the Specialty Admitted Insurance segment posted a small underwriting loss of $85,000 with a combined ratio of 100.2%, impacted by higher net commissions, and the Casualty Reinsurance segment, which has suspended new underwriting, recorded an underwriting profit of $434,000 and a combined ratio of 99.3% as it runs off existing business Combined Ratios by Segment (Six Months Ended June 30) | Segment | 2023 Combined Ratio | 2022 Combined Ratio | | :--- | :--- | :--- | | Excess and Surplus Lines | 87.3% | 83.7% | | Specialty Admitted Insurance | 100.2% | 96.1% | | Casualty Reinsurance | 99.3% | 109.8% | - The Excess and Surplus Lines segment's gross written premiums grew **9.4%** to **$515.0 million** in the first half of 2023, driven by attractive market conditions and renewal rate increases of **10.2%**[188](index=188&type=chunk)[195](index=195&type=chunk) - The Specialty Admitted Insurance segment's expense ratio increased from **19.6%** to **25.6%** year-over-year, mainly due to the termination of a workers' compensation quota share treaty, which increased net commission expense[199](index=199&type=chunk) [Investing Results](index=45&type=section&id=Investing%20Results) Net investment income for the six months ended June 30, 2023, increased by 64.5% to $50.9 million from $31.0 million in the prior-year period, driven by higher yields on fixed maturities, bank loans, and cash equivalents, with the annualized gross investment yield on the total portfolio rising to 4.3% from 2.7%, and the company also recognized net realized and unrealized investment gains of $2.6 million, a significant turnaround from a $22.1 million loss in the same period of 2022 Net Investment Income by Category (Six Months Ended June 30, in thousands) | Category | 2023 | 2022 | | :--- | :--- | :--- | | Fixed maturity securities | $33,360 | $22,611 | | Bank loan participations | $8,686 | $5,062 | | Cash, cash equivalents, and short term investments | $5,811 | $380 | | **Total Net Investment Income** | **$50,947** | **$30,972** | - At June 30, 2023, **99.9%** of the Company's fixed maturity security portfolio was rated investment grade (**'BBB-' or better**)[210](index=210&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains liquidity through operating cash flows, investment income, and credit facilities, with the holding company having **$22.5 million** in cash and invested assets not subject to regulatory restrictions as of June 30, 2023, and a **$315.0 million** senior revolving credit facility and other debt instruments, with a leverage ratio of **22.3%**, well below the **35.0%** covenant maximum, while dividend capacity from subsidiaries is subject to regulatory limits, and the company utilizes extensive ceded reinsurance to manage risk, with all material recoverables from reinsurers rated **'A-' or better** or fully collateralized - Cash provided by operating activities was **$40.3 million** for the first six months of 2023, down from **$139.2 million** in the prior year, primarily due to the suspension of underwriting in the Casualty Reinsurance segment[220](index=220&type=chunk) - The company's leverage ratio was **22.3%** at June 30, 2023, comfortably below the **35.0%** maximum permitted by its credit agreements[240](index=240&type=chunk) - The company has significant reinsurance recoverables of **$1.55 billion** on unpaid losses and **$182.0 million** on paid losses, with credit risk mitigated by high ratings or collateralization[254](index=254&type=chunk) [Reconciliation of Non-GAAP Measures](index=57&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20MEASURES) This section provides reconciliations for key non-GAAP financial measures used by management to evaluate performance, including Underwriting Profit, Adjusted Net Operating Income, and Tangible Equity, bridging these non-GAAP figures to their most directly comparable GAAP measures, such as income before taxes and shareholders' equity, to provide transparency into the adjustments made Reconciliation to Adjusted Net Operating Income (Six Months Ended June 30, 2023, in thousands) | Description | Amount | | :--- | :--- | | **Income available to common shareholders (GAAP)** | **$28,051** | | Losses and loss adjustment expenses - retroactive reinsurance | $15,497 | | Net realized and unrealized investment (gains) losses | $(2,179) | | Other expenses | $773 | | **Adjusted net operating income (Non-GAAP)** | **$42,142** | Reconciliation to Tangible Equity (as of June 30, 2023, in thousands) | Description | Amount | | :--- | :--- | | **Shareholders' equity (GAAP)** | **$595,923** | | Add: Series A redeemable preferred shares | $144,898 | | Add: Deferred reinsurance gain | $37,572 | | Less: Goodwill | $(181,831) | | Less: Intangible assets, net | $(35,494) | | **Tangible equity (Non-GAAP)** | **$561,068** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its primary market risks are interest rate risk from its fixed maturity investments and equity price risk from its equity security investments, with no material changes in these market risks since the disclosures in its Annual Report on Form 10-K for the year ended December 31, 2022 - The company's primary market risks are interest rate risk and equity price risk[276](index=276&type=chunk) - There were no material changes in market risk exposure during the quarter ended June 30, 2023[277](index=277&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2023, with no changes in its internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[278](index=278&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[279](index=279&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a purported class action lawsuit filed in July 2021, alleging failure to make appropriate disclosures concerning the adequacy of reserves for policies covering a subsidiary of Uber Technologies, Inc., with the company believing the claims are without merit and intending to defend the lawsuit vigorously, and management not believing the outcome of this or other ordinary course legal proceedings will have a material adverse effect on the company's financial position - A purported class action lawsuit filed in July 2021 alleges inadequate disclosures regarding reserves for policies covering Rasier LLC, a subsidiary of Uber[282](index=282&type=chunk) - The company believes the claims are without merit and is vigorously defending the lawsuit[282](index=282&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) The company reports that there have been no material changes in its risk factors during the quarter ended June 30, 2023, from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the company's risk factors from the most recent Form 10-K[283](index=283&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[284](index=284&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to employment agreements, an amended and restated credit agreement, CEO/CFO certifications, and Inline XBRL data files - Key exhibits include a Third Amended and Restated Credit Agreement dated July 7, 2023, and various CEO/CFO certifications[286](index=286&type=chunk)

Financial Data and Key Metrics Changes - Tangible common equity per share increased by 15% from year-end 2022 [3] - Adjusted net operating income was reported at $0.56 per share, an increase of over 50% compared to the prior year quarter [8] - Adjusted net operating return on tangible common equity was 16.3%, an increase of over 60 basis points from the previous quarter [8] - The company reported $21.6 million of adjusted net operating income, the highest quarterly total in over three years [18] Business Line Data and Key Metrics Changes - In the Excess & Surplus (E&S) segment, gross premium written increased by 12.1%, while net premium increased by 17.3% [4] - The combined ratio in E&S was 86.8%, with an underwriting profit of $20 million for the period [4] - Workers' compensation rates stabilized with a 1% increase in the individual risk unit, while California's program faced more pressure [5] - Specialty Admitted segment saw gross premiums written down less than 1%, but net premium increased by 32% [20] Market Data and Key Metrics Changes - Renewal rate increases in the E&S segment were 8.9%, nearly 250 basis points higher than Q4 2022 [19] - The excess property book experienced renewal rate increases of 45% [19] - Policy count in the E&S segment grew by 13%, with significant growth in excess casualty and general casualty [11] Company Strategy and Development Direction - The company is focused on producing consistent earnings and returns for shareholders while diversifying E&S product offerings [3] - There is a strong emphasis on underwriting profitability and managing collateral and security requirements in the fronting business [5] - The company aims to deploy capital where there is confidence in generating consistent profitability and attractive returns for shareholders [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the outlook for James River, citing strong market conditions and a focus on core business strengths [3] - The company is excited about market opportunities and plans to continue scaling its operations [24] - Management acknowledged challenges in the workers' compensation market but remains confident in long-term profitability [13] Other Important Information - The company maintained a conservative investment approach, with an average credit quality of A+ in its portfolio [9] - The tax rate for the quarter was reported at 24.6%, with expectations for a modestly lower effective tax rate for the full year [41] Q&A Session Summary Question: What are the growth opportunities in the E&S business? - Management noted healthy growth opportunities across most underwriting divisions, with renewal submissions up 8% and policy count increasing nearly 13% [11] Question: How is the company managing its expense ratio? - The expense ratio for the quarter was 28.4%, higher than the previous year due to increased retention in the excess casualty line and changes in reinsurance structure [40] Question: What is the outlook for the Specialty Admitted segment? - Management indicated that the Specialty Admitted segment is expected to continue generating earned premium, but gross written premium is expected to grade down as underwriting activities are suspended [35]

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2023, providing a comprehensive overview of the company's financial position and performance [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on critical accounting policies, investment portfolio valuation, loss reserve reconciliations, segment performance, debt structure, and equity details, including significant loss portfolio transfers and preferred shares - The company has entered into two significant loss portfolio transfers (LPTs): the Commercial Auto LPT with Aleka and the Casualty Re LPT with Fortitude Re. Both are in **gain positions**, requiring **retroactive reinsurance accounting**, which defers gains and impacts reported losses and loss adjustment expenses[68](index=68&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - For Q1 2023, the company recognized adverse prior year development of **$48.9 million** on reserves subject to the LPTs ($41.0M for Commercial Auto, $7.8M for Casualty Re). This resulted in a retroactive reinsurance benefit of **$32.0 million** being recorded in losses and loss adjustment expenses[73](index=73&type=chunk)[75](index=75&type=chunk) - On March 1, 2022, the company issued **150,000 shares** of 7% Series A Perpetual Cumulative Convertible Preferred Shares for an aggregate price of **$150.0 million**. These shares are classified as **mezzanine equity** due to a holder repurchase option upon certain change of control events[119](index=119&type=chunk)[129](index=129&type=chunk) Condensed Consolidated Balance Sheet Highlights (as of March 31, 2023) | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Invested Assets | $2,213,862 | $2,192,294 | | Total Assets | $5,205,087 | $5,137,075 | | Reserve for Losses | $2,841,993 | $2,768,995 | | Total Liabilities | $4,469,274 | $4,438,411 | | Total Shareholders' Equity | $590,915 | $553,766 | Condensed Consolidated Statement of Income Highlights (Three Months Ended March 31) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Gross Written Premiums | $363,893 | $359,936 | | Net Earned Premiums | $208,113 | $189,824 | | Total Revenues | $235,601 | $201,948 | | Net Income | $9,608 | $10,205 | | Net Income Available to Common Shareholders | $6,983 | $9,330 | | Diluted EPS | $0.18 | $0.25 | Condensed Consolidated Statement of Cash Flows Highlights (Three Months Ended March 31) | Metric | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $19,452 | $65,355 | | Net Cash Provided by (Used in) Investing Activities | $17,126 | $(87,134) | | Net Cash (Used in) Provided by Financing Activities | $(8,805) | $101,855 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q1 2023 financial performance, focusing on underwriting profit, adjusted net operating income, segment results, investment income, strategic actions, and liquidity and capital resources - The company has **suspended writing new business** in the **Casualty Reinsurance segment** to focus on growing its higher-returning U.S. insurance businesses. The segment will continue to earn premiums from existing business in run-off[166](index=166&type=chunk) - Net investment income increased by **58.4%** to **$25.8 million** in Q1 2023 from **$16.3 million** in Q1 2022, primarily driven by higher yields on fixed maturities, bank loans, and cash equivalents[177](index=177&type=chunk)[198](index=198&type=chunk) Key Performance Metrics (Three Months Ended March 31, in millions) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Underwriting Profit (Non-GAAP) | 10.6 | 5.0 | | Adjusted Net Operating Income (Non-GAAP) | 21.6 | 13.9 | | Combined Ratio | 94.9% | 97.4% | | Loss Ratio | 66.5% | 71.4% | [Segment Results](index=39&type=section&id=Segment%20Results) This section details segment performance, highlighting strong growth and profitability in Excess and Surplus Lines, an underwriting loss in Specialty Admitted Insurance, and improved results in the run-off Casualty Reinsurance segment Combined Ratio by Segment (Three Months Ended March 31) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | Excess and Surplus Lines | 86.8% | 83.7% | | Specialty Admitted Insurance | 102.3% | 98.9% | | Casualty Reinsurance | 99.2% | 122.5% | - Excess and Surplus Lines segment GWP increased **12.1%** to **$228.9 million**, driven by favorable market conditions and an **8.9%** increase in renewal rates[181](index=181&type=chunk)[190](index=190&type=chunk) - Casualty Reinsurance GWP decreased **65.1%** to **$10.4 million**, reflecting the **suspension of underwriting activities**. The current period's written premiums are adjustments to prior year treaties[181](index=181&type=chunk)[184](index=184&type=chunk)[195](index=195&type=chunk) [Investing Results](index=41&type=section&id=Investing%20Results) Net investment income significantly increased in Q1 2023 due to higher yields, with the portfolio primarily comprising investment-grade fixed maturity securities Net Investment Income Breakdown (Three Months Ended March 31, 2023) | Category | Income (in thousands) | | :--- | :--- | | Fixed maturity securities | $16,427 | | Bank loan participations | $4,312 | | Equity securities | $1,665 | | Other invested assets | $1,591 | | Cash and short-term investments | $2,862 | | **Gross Investment Income** | **$26,857** | - The annualized gross investment yield on fixed maturity securities increased to **4.1%** in Q1 2023 from **2.7%** in Q1 2022[199](index=199&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily driven by premiums and investment income, with operating cash flow decreasing due to strategic changes, while maintaining a strong leverage ratio and extensive reinsurance programs - The company's leverage ratio was **22.8%** as of March 31, 2023, comfortably below the maximum **35.0%** permitted by its senior credit agreements[230](index=230&type=chunk) - The company's insurance subsidiaries have an A.M. Best financial strength rating of **"A-" (Excellent)** with a stable outlook[255](index=255&type=chunk) - The company details its collateral arrangements for the legacy Rasier commercial auto book, with a total of **$245.0 million** securing Rasier's indemnity obligations and **$108.7 million** securing Aleka's obligations under the Commercial Auto LPT as of March 31, 2023[250](index=250&type=chunk)[251](index=251&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk profile from the prior year, with primary risks remaining interest rate and equity price fluctuations - There have been **no material changes** in market risk from the information provided in the Annual Report on Form 10-K for the year ended December 31, 2022[273](index=273&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2023[274](index=274&type=chunk) - **No material changes** to internal control over financial reporting were identified during the quarter ended March 31, 2023[275](index=275&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a class action lawsuit alleging inadequate disclosures regarding reserves for Rasier LLC policies, which it intends to vigorously defend - A purported class action lawsuit alleges **inadequate disclosures** regarding reserves for policies covering Rasier LLC (Uber) for the period between February 22, 2019, and October 25, 2021[278](index=278&type=chunk)[279](index=279&type=chunk) - The company believes the plaintiffs' claims are **without merit** and is **actively defending** against the lawsuit[279](index=279&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported for the quarter ended March 31, 2023, compared to the prior annual report - **No material changes** in risk factors were reported for the quarter ended March 31, 2023[280](index=280&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) This section provides administrative details, including the scheduled date for the 2023 annual general meeting of shareholders and related deadlines - The 2023 annual general meeting of shareholders is scheduled for **July 27, 2023**[283](index=283&type=chunk)

Financial Data and Key Metrics Changes - The company reported an adjusted net operating income of $0.53 per share for Q4 2022, with an annualized net operating return on tangible common equity of 23.5% [36] - For the full year 2022, the adjusted net operating return on tangible common equity was 17.4%, marking the highest in the company's history [37] - The tangible book value per common share increased by 8.5% in Q4 to $9.51, indicating strong momentum heading into 2023 [36] Business Line Data and Key Metrics Changes - In the E&S segment, gross premiums increased by 11.3% and net premiums by 20.5% in Q4 2022, with a combined ratio of 85.1% for the full year [5][15] - The Casualty Reinsurance segment saw a significant decline in gross written premiums by 76.8% in Q4 and 53.2% for the full year, aligning with the company's strategy to reduce top-line writings [7][16] - The Specialty Admitted segment achieved an 86.8% combined ratio and modest premium growth despite a reduction in individual risk workers' compensation business [15] Market Data and Key Metrics Changes - Renewal rates increased by 6.5% in Q4 2022 and nearly 10% for the full year, indicating a robust market environment [32] - The company experienced a strong growth in renewal submissions, up 8% in Q4, reflecting healthy market conditions [43] Company Strategy and Development Direction - The company is focused on repositioning around its core strengths and has suspended underwriting activities in the Casualty Reinsurance segment to allocate capital more effectively [35] - The strategic actions taken over the past two years are expected to lead to stronger future profitability and reduced volatility [16][17] - The company aims to drive a mid-teen return on tangible common equity in 2023, benefiting from favorable conditions in the E&S market [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the E&S market and the opportunities presented by the fronting marketplace [17] - The company anticipates continued favorable underwriting conditions throughout 2023, with a slight increase in loss cost trends due to inflationary pressures [32][58] - The management highlighted the importance of prudent portfolio management and the expectation of a stable expense ratio despite changes in business mix [24][71] Other Important Information - The company reported a combined ratio of 94.3% for the full year, with fee income growth of 4.3% [33] - Investment income for Q4 was $22.8 million, growing 32% sequentially and 88% year-over-year, supported by strong cash flow and rising interest rates [19][20] Q&A Session Summary Question: Guidance on mid-teen return on tangible common equity - Management indicated that the mid-teen guidance reflects a conservative view of the market, with expectations for continued growth in the E&S segment [42][43] Question: Impact of Casualty Re underwriting cessation - Management confirmed that they expect to earn about half the premium from the Casualty Re segment in 2023, focusing on servicing the in-force portfolio [22][49] Question: Pricing relative to loss trends in E&S business - Management noted that while there are pressures in some areas, overall pricing remains favorable compared to loss trends, with a cautious view on loss cost trends for the upcoming year [56][58]