James River (JRVR) - 2025 Q2 - Quarterly Results

Executive Summary & Q2 2025 Highlights Q2 2025 Financial Performance Overview James River Group reported a decrease in Q2 2025 net income from continuing operations and a slight decline in adjusted net operating income compared to Q2 2024 Q2 2025 Financial Performance Summary | Metric | Q2 2025 ($ in thousands) | Q2 2025 (per diluted share) | Q2 2024 ($ in thousands) | Q2 2024 (per diluted share) | | :---------------------------------------------------- | :----------------------- | :-------------------------- | :----------------------- | :-------------------------- | | Net income from continuing operations available to common shareholders | $3,151 | $0.07 | $11,853 | $0.31 | | Net loss from discontinued operations | $(361) | $(0.01) | $(6,853) | $(0.18) |\ | Net income available to common shareholders | $2,790 | $0.06 | $5,000 | $0.13 |\ | Adjusted net operating income | $11,693 | $0.23 | $12,664 | $0.33 | - Adjusted net operating income per diluted share for Q2 2025 reflects the Company's amendment to Series A Preferred Shares and common equity investment from Cavello Bay Reinsurance Limited, both closed in Q4 2024[2] Key Operational Highlights The company achieved strong operational metrics, including a high return on tangible common equity, robust E&S segment performance, and an improved group expense ratio - Annualized adjusted net operating return on tangible common equity was 14.0%, with year-to-date growth in tangible common equity of 12.8%[3] - The E&S segment achieved a combined ratio of 91.7% and a renewal rate change of 13.9%, with excess casualty renewal rates increasing over 24%[3] - Quarterly gross written premium for the E&S segment exceeded $300 million for the first time, marking a 3% year-over-year increase[3] - The group expense ratio declined to 30.5% from 32.7% in the prior quarter, driven by reduced general and administrative expenses[3] CEO Commentary CEO Frank D'Orazio highlighted the continued execution of strategic priorities, focusing on growing the casualty E&S business through disciplined underwriting and ongoing expense management - CEO Frank D'Orazio stated that Q2 results reflect continued execution of strategic priorities, including growing casualty E&S business through disciplined underwriting and managing expenses[4] - The company is focused on enhancing profitability and strengthening operational efficiency to deliver long-term value for shareholders, with new leadership appointments in place[4] Segment Performance Excess and Surplus (E&S) Lines Segment The E&S segment demonstrated strong performance with premium growth accelerating to 3% year-over-year, excluding excess property, and significant renewal rate increases - E&S Segment premium growth accelerated to 3% from Q1 2025; casualty lines, excluding excess property, grew gross written premium by 4% year-over-year[4] - Segment renewal rates increased by 13.9% during the quarter, nearly double the Q1 2025 increase, with casualty lines seeing a 14.5% increase[4] - The E&S segment experienced strong submission growth, with new and renewal submissions increasing by 5% and 16% respectively, compared to the prior year quarter[4] Specialty Admitted Insurance Segment The Specialty Admitted Insurance segment experienced a significant decline in gross written premium by 30.7% year-over-year, reflecting a strategic decision to manage risk - Gross written premium for the fronting and program business in the Specialty Admitted Insurance segment declined 30.7% year-over-year, aligning with the Company's strategy to manage risk[4] - Overall segment premium, inclusive of workers' compensation, declined by 35.0%[4] - The Company is focused on managing expenses in this segment, with year-to-date expenses declining 21.3% compared to the first six months of 2024[4] Consolidated Operating Results Premium Performance Consolidated gross written premium decreased by 8% to $378.0 million in Q2 2025, primarily due to a 35% decline in the Specialty Admitted Insurance segment Gross Written Premium (Q2 2025 vs. Q2 2024) ($ in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | | :---------------------------- | :------ | :------ | :------- | | Excess and Surplus Lines | $300,444 | $292,836 | 3 % | | Specialty Admitted Insurance | $77,559 | $119,411 | (35)% | | Total | $378,003 | $412,247 | (8)% | Net Written Premium (Q2 2025 vs. Q2 2024) ($ in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | | :---------------------------- | :------ | :------ | :------- | | Excess and Surplus Lines | $166,645 | $161,601 | 3 % | | Specialty Admitted Insurance | $9,345 | $19,752 | (53)% | | Total | $175,990 | $181,353 | (3)% | Net Earned Premium (Q2 2025 vs. Q2 2024) ($ in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | | :---------------------------- | :------ | :------ | :------- | | Excess and Surplus Lines | $141,370 | $140,447 | 1 % | | Specialty Admitted Insurance | $11,239 | $22,746 | (51)% | | Total | $152,609 | $163,193 | (6)% | Reserve Development The company experienced pre-tax unfavorable reserve development of $3.0 million in Q2 2025, a significant improvement from $10.7 million in Q2 2024 Pre-tax (Unfavorable) Favorable Reserve Development (Q2 2025 vs. Q2 2024) ($ in thousands) | Segment | Q2 2025 | Q2 2024 | | :---------------------------- | :------ | :------ | | Excess and Surplus Lines | $(2,327) | $(10,662) | | Specialty Admitted Insurance | $(700) | $4 | | Total | $(3,027) | $(10,658) | - The Company ceded $10.6 million of unfavorable reserve development on business subject to the Combined Loss Portfolio Transfer and Adverse Development Cover Reinsurance Contract (E&S ADC) during Q2 2025[6] - There remains $103.8 million of aggregate limit on the E&S ADC and adverse development reinsurance contract with Cavello Bay (E&S Top Up ADC)[6] Expense Ratio The consolidated expense ratio for Q2 2025 was 30.5%, an increase from the prior year quarter but a decline from the prior quarter due to lower general and administrative expenses - The consolidated expense ratio was 30.5% for Q2 2025, an increase from 26.3% in Q2 2024[6] - The expense ratio declined from 32.7% in the prior quarter, primarily due to lower general and administrative expenses in the corporate segment[6][7] Underwriting Performance Ratios The E&S segment's loss ratio improved to 66.4% and combined ratio improved to 91.7% for Q2 2025, excluding retroactive reinsurance Underwriting Performance Ratios (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :---------------------------------------------- | :-------- | :-------- | | Excess and Surplus Lines: | | | | Loss Ratio | 66.4 % | 72.3 % | | Combined Ratio | 91.7 % | 95.4 % | | Loss Ratio including impact of retroactive reinsurance | 72.9 % | 69.7 % | | Combined Ratio including impact of retroactive reinsurance | 98.2 % | 92.8 % | | Consolidated: | | | | Loss Ratio | 68.1 % | 73.0 % | | Combined Ratio | 98.6 % | 99.3 % | | Loss Ratio including impact of retroactive reinsurance | 74.2 %