James River (US:JRVR)2024-11-12 21:07Financial Performance - Net cash used in operating activities for the nine months ended September 30, 2024, was $(254.55) million, compared to $97.75 million for the same period in 2023[9]. - For the three months ended September 30, 2024, the net loss from continuing operations was $38.1 million, compared to a net income of $23.7 million for the same period in 2023[53]. - The company reported a net loss from continuing operations of $91,000 for the nine months ended September 30, 2024, compared to a net income of $41.2 million for the same period in 2023[116]. - The total underwriting loss for the operating segments was $(48,345) thousand for the three months ended September 30, 2024, compared to a profit of $20,309 thousand in the same period of 2023[72]. - The company reported a loss before taxes of $(55,920) thousand for Q3 2024, compared to an income before taxes of $30,735 thousand in Q3 2023[186]. Cash Flow and Investments - The sale of JRG Re generated $96.41 million in cash, while net cash provided by investing activities was $321.37 million, a significant increase from $(18.02) million in the prior year[9]. - Cash and cash equivalents at the end of the period totaled $388.14 million, up from $339.78 million at the end of September 2023[9]. - Cash provided by investing activities was $321.4 million for the nine months ended September 30, 2024, including $96.4 million from the sale of JRG Re[150]. - The company recognized net realized and unrealized investment gains of $6.4 million for the nine months ended September 30, 2024[136]. - The total fair value of fixed maturity securities available-for-sale amounted to $1,215,244,000 as of September 30, 2024[137]. Debt and Financing Activities - Senior debt repayments amounted to $21.5 million, and dividends on Series A preferred shares were $10.5 million, contributing to a net cash used in financing activities of $(38.63) million[9]. - The company had a drawn balance of $185.8 million outstanding on its unsecured revolving credit facility as of September 30, 2024[74]. - The fair value of senior debt as of September 30, 2024, is $205,874,000, down from $233,408,000 as of December 31, 2023[83]. - The leverage ratio was 24.8% as of September 30, 2024, down from 26.0% at December 31, 2023, with a maximum permitted leverage ratio of 35.0%[159][161]. Shareholder Equity and Dividends - Cash dividends paid for the nine months ended September 30, 2024, amounted to $10.5 million, compared to $7.9 million for the same period in 2023, reflecting a 33% increase[84]. - The Company declared total dividends of $5.8 million on common shares for the first nine months of 2024, compared to $5.76 million for the same period in 2023[89]. - The Series A Preferred Shares issuance totaled $150.0 million, with dividends accruing quarterly at an initial rate of 7%[171]. - The total common shares outstanding increased from 37,641,563 at December 31, 2023, to 37,829,475 at September 30, 2024, due to the vesting of RSUs[172]. Underwriting and Loss Ratios - The combined ratio is a key performance measure, with a ratio of less than 100% indicating an underwriting profit[102]. - Underwriting results showed a loss of $56.8 million in Q3 2024, with a combined ratio of 135.5%, compared to a profit of $11.8 million and a combined ratio of 93.6% in Q3 2023[115]. - The loss ratio increased to 104.1% in Q3 2024 from 67.2% in Q3 2023, primarily due to higher net adverse reserve development[115]. - The nine-month expense ratio increased from 22.5% in the prior year to 24.6% in the current year, primarily due to higher compensation costs[129]. Strategic Transactions - The company completed the sale of JRG Re on April 16, 2024, marking a strategic shift in operations[21]. - The Company entered into a Stock Purchase Agreement to sell JRG Re for an aggregate purchase price of approximately $291.4 million, consisting of $152.4 million in cash and a $139.0 million dividend from contributed surplus[31]. - The estimated loss on the sale of JRG Re was revised to $78.3 million for the nine months ended September 30, 2024, with a loss on disposal of $2.7 million including a $2.1 million gain from the change in estimated loss[31]. - The Company entered into a Combined Loss Portfolio Transfer and Adverse Development Cover Reinsurance Contract with State National Insurance Company, effective January 1, 2024, with a reinsurance premium of $313.2 million[58]. Legal and Regulatory Matters - The Company is involved in various legal proceedings, including a class action lawsuit filed on November 13, 2023, alleging violations of the Securities Exchange Act of 1934, with claims for unspecified damages[63]. - The Company filed a complaint against Fleming Intermediate Holdings LLC for breach of the Stock Purchase Agreement, seeking specific performance and damages[64]. - The Company intends to vigorously defend against claims made by Fleming, which include common law fraud and breaches of contract[64]. Market and Risk Management - The company has identified primary market risks including interest rate risk associated with fixed maturities and equity price risk related to equity securities[192]. - There is no material exposure to foreign currency exchange rate risk or commodity risk[192]. - The company closely monitors its exposure compared to collateral held and requests additional collateral when necessary[67].