James River (JRVR) - 2025 Q2 - Quarterly Report

FORM 10-Q General Information This section provides key filing details for the Quarterly Report on Form 10-Q, including the reporting period and common shares outstanding Filing Details This section outlines the Form 10-Q filing specifics, including the reporting period, filer status, and common shares outstanding - The registrant is an accelerated filer and not a shell company[5][6] Filing Details | Metric | Value | | :----- | :---- | | Quarterly Period Ended | June 30, 2025 | | Commission File Number | 001-36777 | | Common Shares Outstanding (July 31, 2025) | 45,916,453 | | SEC Filings (Past 12 Months) | Yes | | Interactive Data File Submissions (Past 12 Months) | Yes | Special Note Regarding Forward-Looking Statements This section provides a disclaimer regarding forward-looking statements, emphasizing inherent uncertainties and the company's lack of obligation to update them Forward-Looking Statements Disclaimer This disclaimer notes that forward-looking statements are subject to significant uncertainties and risks, and actual results may differ materially from expectations - Forward-looking statements are subject to uncertainties, risks, and changes in circumstances that are difficult to predict, and actual results may differ materially[11][12] - Key risk factors include the inherent uncertainty of estimating reserves, inaccurate risk management estimates, potential financial strength rating downgrades, and the outcome of litigation related to the sale of the casualty reinsurance business[12] - The company does not have an obligation to update any forward-looking statements to reflect events or circumstances arising after the report date, except as required by law[15] PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section provides the unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, and cash flow statements, with accompanying notes Condensed Consolidated Balance Sheets The balance sheets detail assets, liabilities, and shareholders' equity, showing a slight increase in total assets and shareholders' equity Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :------------ | :---------------- | | Total Assets | $5,018,322 | $5,007,076 | | Total Liabilities | $4,392,649 | $4,413,046 | | Total Shareholders' Equity | $492,558 | $460,915 | - Invested assets increased from $1,552.4 million at December 31, 2024, to $1,716.5 million at June 30, 2025[18] - Reserve for losses and loss adjustment expenses slightly decreased from $3,084.4 million to $3,076.5 million[21] Condensed Consolidated Statements of Income and Comprehensive Income Income statements reflect decreased net income for both three and six-month periods, driven by lower earned premiums and investment income Condensed Consolidated Statements of Income and Comprehensive Income | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Earned Premiums | $152,609 | $163,193 | $304,511 | $334,884 | | Net Investment Income | $20,516 | $24,931 | $40,524 | $47,563 | | Total Revenues | $174,843 | $188,289 | $347,132 | $389,416 | | Net Income | $4,759 | $7,625 | $14,333 | $23,028 | | Net Income Available to Common Shareholders | $2,790 | $5,000 | $10,395 | $17,778 | | Basic EPS (Continuing Operations) | $0.07 | $0.31 | $0.27 | $0.87 | | Diluted EPS (Continuing Operations) | $0.07 | $0.31 | $0.26 | $0.85 | - Net income available to common shareholders decreased by 44.2% for the three months and 41.5% for the six months ended June 30, 2025, compared to the prior year periods[23] - Total comprehensive income significantly increased for both periods in 2025, driven by net unrealized gains on investments[23] Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased to $492.6 million by June 30, 2025, primarily due to net income and other comprehensive income Condensed Consolidated Statements of Changes in Shareholders' Equity | Metric | Balances at Dec 31, 2024 (in thousands) | Balances at Jun 30, 2025 (in thousands) | | :-------------------- | :----------------------- | :----------------------- | | Additional Paid-in Capital | $933,311 | $936,255 | | Retained Deficit | $(402,408) | $(392,958) | | Accumulated Other Comprehensive Loss | $(69,997) | $(50,748) | | Total Shareholders' Equity | $460,915 | $492,558 | - Net income contributed $14.3 million to shareholders' equity for the six months ended June 30, 2025[24] - Other comprehensive income added $19.2 million for the six months ended June 30, 2025, primarily from net unrealized gains[24] Condensed Consolidated Statements of Cash Flows Cash flow statements show a shift to cash used in operating and investing activities, while financing activities provided cash in 2025 Condensed Consolidated Statements of Cash Flows | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | | Net Cash (Used in) Provided by Operating Activities | $(26,310) | $15,397 | | Net Cash (Used in) Provided by Investing Activities | $(133,699) | $356,628 | | Net Cash Provided by (Used in) Financing Activities | $18,321 | $(31,488) | | Change in Cash, Cash Equivalents, and Restricted Cash Equivalents | $(141,688) | $340,537 | | Cash, Cash Equivalents, and Restricted Cash Equivalents at End of Period | $249,362 | $700,486 | - Cash used in operating activities (excluding restricted cash equivalents) was $26.9 million for the six months ended June 30, 2025, compared to $59.9 million provided in the prior year, impacted by timing of reinsurance settlements and lower premium collections[28][52] - Investing activities used $133.7 million in 2025, reflecting investments in higher-yielding assets, a change from $356.6 million provided in 2024 which included proceeds from the sale of JRG Re and fixed maturities[28][52] Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures for financial statements, covering accounting policies, investments, loss reserves, and contingent liabilities Note 1. Accounting Policies This note details the company's organizational structure, basis of financial statement presentation, and key accounting policies - The Company is an exempted holding company registered in Bermuda, owning five U.S.-based specialty insurance companies[31] - The sale of JRG Re, which closed on April 16, 2024, is presented as discontinued operations due to its strategic impact[31][34] - The effective tax rate on income from continuing operations was 30.1% and 31.0% for the three and six months ended June 30, 2025, respectively, influenced by the mix of income by country and tax-advantaged securities[40] Note 2. Discontinued Operations This note details the sale of JRG Reinsurance Company Ltd. for approximately $291.4 million, with its operations now reported as discontinued - The sale of JRG Re to Fleming closed on April 16, 2024, for approximately $291.4 million, including $152.4 million in cash and a $139.0 million dividend[45][46] - Post-closing adjustments led to an $11.4 million downward adjustment paid in October 2024, and a final $483,625 downward adjustment paid in April 2025[47] Discontinued Operations Financials | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gross Written Premiums | $0 | $780 | $0 | $1,137 | | Net Earned Premiums | $0 | $1,720 | $0 | $10,385 | | Loss from Discontinued Operations | $0 | $(5,650) | $0 | $(13,583) | | Loss on Disposal of Discontinued Operations | $(361) | $(1,203) | $(1,775) | $(1,375) | | Total Loss from Discontinued Operations | $(361) | $(6,853) | $(1,775) | $(14,958) | Note 3. Investments This note details the investment portfolio, including fixed maturity and equity securities, with fair values and unrealized gains/losses Investment Portfolio Fair Value | Investment Category | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :------------------------------- | :----------------------- | :--------------------------- | | Fixed Maturity Securities, AFS | $1,300,217 | $1,189,733 | | Equity Securities | $88,042 | $86,479 | | Bank Loan Participations | $158,871 | $142,410 | | Short-term Investments | $111,216 | $97,074 | | Other Invested Assets | $58,140 | $36,700 | | Total Invested Assets | $1,716,486 | $1,552,396 | - At June 30, 2025, the company held fixed maturity securities with $70.2 million in gross unrealized losses, but management concluded no credit-related impairments existed[55][57] - Bank loan participations, primarily senior, secured floating-rate debt rated below investment grade, had an aggregate fair value of $158.9 million at June 30, 2025[60][61] Net Realized & Unrealized (Losses) Gains on Investments | Net Realized & Unrealized (Losses) Gains on Investments | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :--------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fixed Maturity Securities | $0 | $(798) | $25 | $(1,109) | | Bank Loan Participations | $253 | $(843) | $(2,061) | $(1,124) | | Equity Securities | $(605) | $(664) | $313 | $4,511 | | Total | $(352) | $(2,305) | $(1,723) | $2,278 | Note 4. Goodwill and Intangible Assets This note details goodwill, constant at $181.8 million, and identifiable intangible assets, including trademarks and broker relationships - Goodwill remained at $181.8 million at June 30, 2025, and December 31, 2024[73] Intangible Assets | Intangible Asset Class | Life (Years) | June 30, 2025 Net (in thousands) | December 31, 2024 Net (in thousands) | | :---------------------------------- | :----------- | :---------------- | :-------------------- | | Trademarks | Indefinite | $19,700 | $19,700 | | Insurance Licenses and Authorities | Indefinite | $8,964 | $8,964 | | Broker Relationships | 24.6 | $3,604 | $3,786 | | Total Intangible Assets, Net | | $32,268 | $32,450 | Note 5. Earnings Per Share This note reconciles basic and diluted earnings per share, showing a significant decrease in EPS from continuing operations Earnings Per Share | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income Available to Common Shareholders (in thousands) | $2,790 | $5,000 | $10,395 | $17,778 | | Basic EPS (Continuing Operations) | $0.07 | $0.31 | $0.27 | $0.87 | | Diluted EPS (Continuing Operations) | $0.07 | $0.31 | $0.26 | $0.85 | | Basic EPS (Total) | $0.06 | $0.13 | $0.23 | $0.47 | | Diluted EPS (Total) | $0.06 | $0.13 | $0.22 | $0.52 | | Weighted-Average Common Shares Outstanding (Basic) | 46,032,626 | 37,869,322 | 45,918,697 | 37,801,516 | | Weighted-Average Common Shares Outstanding (Diluted) | 46,726,255 | 38,037,393 | 46,432,481 | 44,762,563 | - Potential common shares of 13,521,634 were excluded from diluted EPS calculation for the three and six months ended June 30, 2025, as their effects were anti-dilutive[76] Note 6. Reserve for Losses and Loss Adjustment Expenses This note reconciles loss and loss adjustment expense reserves, detailing adverse development and the impact of Loss Portfolio Transfers and Adverse Development Covers Reserve for Losses and LAE | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Reserve for Losses and LAE Net of Reinsurance (Beginning) | $1,095,761 | $1,283,386 | $1,086,278 | $1,246,973 | | Total Incurred Losses and LAE | $113,141 | $115,471 | $212,666 | $225,520 | | Total Loss and LAE Payments | $110,482 | $100,879 | $202,452 | $178,517 | | Reserve for Losses and LAE Net of Reinsurance (End) | $1,089,181 | $1,301,662 | $1,089,181 | $1,301,662 | | Gross Reserve for Losses and LAE (End) | $3,076,498 | $2,720,198 | $3,076,498 | $2,720,198 | - Net adverse reserve development of $3.0 million occurred in Q2 2025 ($2.3 million in E&S, $0.7 million in Specialty Admitted), compared to $10.7 million adverse in Q2 2024 (all in E&S)[80][81] - The company utilizes Loss Portfolio Transfers (LPTs) and Adverse Development Covers (ADCs) as retroactive reinsurance to transfer risk, including the Commercial Auto LPT, E&S ADC, and E&S Top Up ADC[85][86][88][89] Deferred Retroactive Reinsurance Gain | Deferred Retroactive Reinsurance Gain | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Commercial Auto LPT (End of Period) | $5,951 | $13,047 | $5,951 | $13,047 | | E&S ADC (End of Period) | $59,330 | $0 | $59,330 | $0 | | Total Deferred Retroactive Reinsurance Gain (End of Period) | $65,281 | $13,047 | $65,281 | $13,047 | Note 7. Other Comprehensive Income (Loss) This note summarizes other comprehensive income (loss), primarily from unrealized gains on available-for-sale fixed maturity securities Other Comprehensive Income (Loss) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Unrealized Gains (Losses) Arising During Period (Before Tax) | $6,237 | $(3,784) | $24,391 | $(13,934) | | Unrealized Gains (Losses) Arising During Period (Net of Tax) | $4,927 | $(2,989) | $19,269 | $(11,008) | | Other Comprehensive Income (Loss) | $4,927 | $(2,359) | $19,249 | $(10,132) | - The significant increase in other comprehensive income for the six months ended June 30, 2025, was primarily due to $24.4 million in unrealized gains on investments before taxes, compared to $13.9 million in losses in the prior year[94] Note 8. Contingent Liabilities This note addresses contingent liabilities, including legal proceedings related to the JRG Re sale and credit risk from reinsurance recoverables - The company is involved in various legal proceedings, including a lawsuit against Fleming for breach of the Stock Purchase Agreement related to the JRG Re sale, and a lawsuit filed by Fleming against the company and its officers, which was dismissed on July 17, 2025[96][97][98][168] - The allowance for credit losses on reinsurance recoverables was $1.5 million at June 30, 2025[79][99] - The company has indemnity agreements with Rasier and a Commercial Auto LPT with Aleka, both requiring collateral (totaling $55.3 million from Rasier and $26.5 million from Aleka at June 30, 2025) to secure obligations on legacy commercial auto policies[100][102] Note 9. Segment Information This note provides financial data for the Excess and Surplus Lines, Specialty Admitted Insurance, and Corporate and Other segments - The company's continuing operations are comprised of three reportable segments: Excess and Surplus Lines, Specialty Admitted Insurance, and Corporate and Other[105] Segment Financials (3 Months Ended June 30, 2025) | Metric | Excess and Surplus Lines (3M 2025, in thousands) | Specialty Admitted Insurance (3M 2025, in thousands) | Corporate and Other (3M 2025, in thousands) | Total (3M 2025, in thousands) | | :-------------------- | :--------------------------------- | :------------------------------------- | :---------------------------- | :-------------- | | Gross Written Premiums | $300,444 | $77,559 | $0 | $378,003 | | Net Earned Premiums | $141,370 | $11,239 | $0 | $152,609 | | Underwriting Profit (Loss) | $11,707 | $(1,421) | $(8,222) | $2,064 | | Segment Assets | $3,639,964 | $1,351,271 | $27,087 | $5,018,322 | Segment Financials (6 Months Ended June 30, 2025) | Metric | Excess and Surplus Lines (6M 2025, in thousands) | Specialty Admitted Insurance (6M 2025, in thousands) | Corporate and Other (6M 2025, in thousands) | Total (6M 2025, in thousands) | | :-------------------- | :--------------------------------- | :------------------------------------- | :---------------------------- | :-------------- | | Gross Written Premiums | $513,687 | $158,677 | $0 | $672,364 | | Net Earned Premiums | $278,398 | $26,113 | $0 | $304,511 | | Underwriting Profit (Loss) | $23,365 | $(1,727) | $(18,853) | $2,785 | | Segment Assets | $3,639,964 | $1,351,271 | $27,087 | $5,018,322 | Note 10. Other Operating Expenses and Other Expenses This note details other operating expenses, including policy acquisition costs and corporate expenses, and non-operating legal fees Other Operating Expenses | Other Operating Expenses | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Amortization of Policy Acquisition Costs | $17,396 | $13,765 | $34,936 | $31,805 | | Other Underwriting Expenses of Operating Segments | $21,853 | $21,707 | $44,242 | $43,340 | | Other Operating Expenses of Corporate and Other Segment | $8,222 | $8,624 | $18,853 | $19,761 | | Total Other Operating Expenses | $47,471 | $44,096 | $98,031 | $94,906 | - Other expenses, primarily non-operating legal and professional fees, were $1.0 million and $1.6 million for the three and six months ended June 30, 2025, respectively[116] Note 11. Senior Debt A new $212.5 million unsecured revolving credit facility was established, with $210.8 million drawn and compliance with all financial covenants - A new Credit Agreement was established on June 12, 2025, providing a $212.5 million unsecured revolving credit facility[117][118] - The facility matures on June 12, 2028, and interest rates are based on SOFR plus a specified margin[118] - At June 30, 2025, the drawn balance on the unsecured revolver was $210.8 million, and the company was in compliance with all financial covenants[119][121] Note 12. Fair Value Measurements This note describes the fair value measurement hierarchy for financial instruments, including fixed maturity and equity securities - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[123] Fair Value Measurements | Asset Category | Level 1 (June 30, 2025, in thousands) | Level 2 (June 30, 2025, in thousands) | Level 3 (June 30, 2025, in thousands) | Total (June 30, 2025, in thousands) | | :---------------------------- | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Fixed Maturity Securities, AFS | $18,292 | $1,281,925 | $0 | $1,300,217 | | Equity Securities | $12,488 | $75,553 | $1 | $88,042 | | Bank Loan Participations | $0 | $158,871 | $0 | $158,871 | | Short-term Investments | $0 | $111,216 | $0 | $111,216 | - The company held one equity security with a fair value of $1,000 at June 30, 2025, determined using Level 3 inputs (internal model)[130] Note 13. Series A Preferred Shares This note details the 112,500 outstanding 7% Series A Preferred Shares, convertible into common stock, with $37.5 million converted in November 2024 - 112,500 Series A Preferred Shares are outstanding, with a 7% annual dividend rate, convertible into common shares at $8.32 per share[141][143][144] - Dividends on Series A preferred shares were $3.9 million for the six months ended June 30, 2025[143] - The Series A Preferred Shares are classified as mezzanine equity at a fair value of $133.1 million due to potential repurchase upon change of control events[149] Note 14. Capital Stock and Equity Awards This note details changes in common shares, quarterly dividends of $0.01 per share, and activity under equity incentive plans - Common shares outstanding increased from 45,644,318 at December 31, 2024, to 45,895,335 at June 30, 2025, due to RSU vesting[153] Dividends per Common Share | Dividend per Common Share | Total Amount (in thousands) | | :------------------------ | :-------------------------- | | $0.01 (Feb 20, 2025) | $477 | | $0.01 (Apr 24, 2025) | $476 | | Total (6M 2025) | $954 | | Total (6M 2024) | $3,879 | RSU Activity | RSU Activity (Shares) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Unvested, Beginning of Period | 885,173 | 751,254 | | Granted | 1,321,733 | 537,060 | | Vested | (362,216) | (268,993) | | Forfeited | (121,369) | (76,305) | | Unvested, End of Period | 1,723,321 | 943,016 | - Share-based compensation expense was $3.5 million for the six months ended June 30, 2025, with $6.9 million unrecognized expense remaining[164] Note 15. Subsequent Events This note reports subsequent events, including dividend declarations, equity award approvals, and the dismissal of Fleming's lawsuit - On July 24, 2025, the Board declared a cash dividend of $0.01 per common share and up to $2.0 million on Series A Preferred Shares, both payable September 30, 2025[165] - Equity awards under the 2014 LTIP and 2014 Director Plan were approved on July 24, 2025, with fair values of $250,000 and $31,000, respectively[167] - The U.S. District Court dismissed Fleming's lawsuit against the company on July 17, 2025, with an appeal deadline of August 18, 2025[168] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and results, covering business overview, key metrics, strategic actions, and segment performance Key Operating Results | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gross Written Premiums | $378,003 | $412,247 | $672,364 | $743,057 | | Net Earned Premiums | $152,609 | $163,193 | $304,511 | $334,884 | | Underwriting Profit | $2,064 | $1,219 | $2,785 | $9,359 | | Net Income Available to Common Shareholders | $2,790 | $5,000 | $10,395 | $17,778 | | Adjusted Net Operating Income | $11,693 | $12,664 | $20,795 | $27,496 | | Combined Ratio | 98.6% | 99.3% | 99.1% | 97.2% | | Loss Ratio | 68.1% | 73.0% | 67.4% | 69.6% | | Expense Ratio | 30.5% | 26.3% | 31.7% | 27.6% | Our Business The company operates through three continuing segments: Excess and Surplus Lines, Specialty Admitted Insurance, and Corporate and Other - The company operates through three continuing reportable segments: Excess and Surplus Lines, Specialty Admitted Insurance, and Corporate and Other[172][176] - JRG Reinsurance Company Ltd. (former Casualty Reinsurance segment) is classified as discontinued operations after its sale on April 16, 2024[172] - The A.M. Best Company financial strength rating for the U.S. insurance subsidiaries is 'A-' (Excellent)[174] Key Metrics This section defines key financial and operational metrics, including non-GAAP measures like underwriting profit and adjusted net operating income - Underwriting profit is a non-GAAP measure defined as net earned premiums and gross fee income less losses and loss adjustment expenses (excluding retroactive reinsurance) and other operating expenses[176][177] - Adjusted net operating income is a non-GAAP measure that excludes discontinued operations, retroactive reinsurance impact, net realized/unrealized investment gains/losses, and certain non-operating expenses[182] - Tangible equity and tangible common equity are non-GAAP measures used to assess balance sheet strength and returns, excluding goodwill and intangible assets[183][185] Critical Accounting Policies and Estimates Critical accounting policies involve significant estimates for loss reserves and investment valuation, with no material changes this year - The most critical accounting policies involve significant estimates related to the reserve for losses and loss adjustment expenses and investment valuation and impairment[190] - There have been no significant changes to these critical accounting policies during the current year[190] Recent Strategic Actions Recent strategic actions include a $313.2 million E&S ADC with State National, a strategic relationship with Enstar, and Series A Preferred Share amendments - The company entered into an E&S ADC with State National, effective January 1, 2024, reinsuring 85% of losses in excess of $716.6 million up to $467.1 million for a $313.2 million premium[192][193] - A strategic relationship with Enstar included a $12.5 million common share purchase and an E&S Top Up ADC for a $52.8 million premium, reinsuring 100% of E&S casualty losses (2010-2023) up to $75.0 million above the E&S ADC limit[194] - The Series A Preferred Shares were amended, converting $37.5 million to common stock, increasing the voluntary conversion price, and delaying the dividend rate reset[195][196] Results of Operations Operating results show decreased net income and adjusted net operating income, with varied underwriting profits and declining investment income Three Months Ended June 30, 2025 and 2024 Net income from continuing operations decreased to $5.1 million, while underwriting profit increased to $2.1 million with a 98.6% combined ratio - Net income from continuing operations decreased by 64.6% to $5.1 million in Q2 2025[198] - Underwriting profit increased by 69.3% to $2.1 million, with a combined ratio of 98.6% (vs. 99.3% in Q2 2024)[197][199] - The loss ratio improved to 68.1% from 73.0% in Q2 2024, primarily due to less net adverse reserve development ($3.0 million adverse in Q2 2025 vs. $10.7 million adverse in Q2 2024)[197][201] - Investment income declined by 17.7% ($4.4 million) due to lower invested assets and yields[197][203] Six Months Ended June 30, 2025 and 2024 Net income from continuing operations decreased to $16.1 million, and underwriting profit declined to $2.8 million with a 99.1% combined ratio - Net income from continuing operations decreased by 57.6% to $16.1 million for the six months ended June 30, 2025[197][206] - Underwriting profit decreased by 70.2% to $2.8 million, with a combined ratio of 99.1% (vs. 97.2% in 6M 2024)[197][207] - The loss ratio improved to 67.4% from 69.6% in 6M 2024, driven by less net adverse reserve development ($2.9 million adverse in 6M 2025 vs. $10.3 million adverse in 6M 2024)[197][208] - Investment income declined by 14.8% ($7.0 million) due to lower invested assets and yields[197][211] Loss Portfolio Transfers and Adverse Development Covers The company uses LPTs and ADCs as retroactive reinsurance to transfer loss risks, deferring gains recognized proportionally to paid recoveries - LPTs and ADCs are retroactive reinsurance forms used to transfer losses and associated risk of adverse development[214] - The Commercial Auto LPT with Aleka reinsures substantially all of the Excess and Surplus Lines segment's legacy commercial auto policies issued to Rasier[215] - Retroactive reinsurance accounting defers gains and recognizes them in proportion to actual paid recoveries, which can cause short-term volatility[216] Deferred Retroactive Reinsurance Gain | Deferred Retroactive Reinsurance Gain | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Commercial Auto LPT (End of Period) | $5,951 | $13,047 | $5,951 | $13,047 | | E&S ADC (End of Period) | $59,330 | $0 | $59,330 | $0 | | Total Deferred Retroactive Reinsurance Gain (End of Period) | $65,281 | $13,047 | $65,281 | $13,047 | Premiums Gross written premiums increased for E&S but declined significantly for Specialty Admitted Insurance due to non-renewals Premiums | Premium Type | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gross Written Premiums | $378,003 | $412,247 | $672,364 | $743,057 | | Excess and Surplus Lines GWP | $300,444 (2.6% YoY) | $292,836 | $513,687 (1.4% YoY) | $506,527 | | Specialty Admitted Insurance GWP | $77,559 (-35.0% YoY) | $119,411 | $158,677 (-32.9% YoY) | $236,530 | | Net Written Premiums | $175,990 (-3.0% YoY) | $181,353 | $303,946 (-4.9% YoY) | $319,525 | | Net Earned Premiums | $152,609 (-6.5% YoY) | $163,193 | $304,511 (-9.1% YoY) | $334,884 | - Excess and Surplus Lines segment's gross written premiums grew by 2.6% and 1.4% for the three and six months, respectively, driven by expansion in largest underwriting divisions and renewal rate increases (13.9% and 11.7%)[219][220] - Specialty Admitted Insurance segment's gross written premiums declined significantly (-35.0% and -32.9%) due to non-renewals in fronting business and the run-off of workers' compensation premium[219][220] Net Retention Net premium retention remained stable for E&S but declined for Specialty Admitted Insurance due to business mix changes Net Premium Retention | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Excess and Surplus Lines | 55.5% | 55.2% | 54.8% | 55.1% | | Specialty Admitted Insurance | 12.0% | 16.5% | 14.0% | 17.1% | | Total | 46.6% | 44.0% | 45.2% | 43.0% | - Net premium retention for Specialty Admitted Insurance declined due to business mix changes and reinsurance renewals, reflecting the strategy to retain minimal risk[222] Segment Results This section details combined ratios and underwriting performance, showing improved E&S results but underwriting losses in Specialty Admitted Insurance Segment Combined Ratios | Segment Combined Ratios | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Excess and Surplus Lines | 91.7% | 95.4% | 91.6% | 91.3% | | Specialty Admitted Insurance | 112.6% | 85.0% | 106.6% | 91.4% | | Total | 98.6% | 99.3% | 99.1% | 97.2% | Excess and Surplus Lines Segment The E&S segment reported increased underwriting profits and an improved combined ratio, driven by less adverse reserve development Excess and Surplus Lines Segment Performance | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Underwriting Profit (in thousands) | $11,707 (82.2% YoY) | $6,427 | $23,365 (-6.2% YoY) | $24,918 | | Loss Ratio | 66.4% | 72.3% | 65.6% | 68.2% | | Expense Ratio | 25.3% | 23.1% | 26.0% | 23.1% | | Combined Ratio | 91.7% | 95.4% | 91.6% | 91.3% | - The loss ratio improved due to less net adverse reserve development ($2.3 million adverse in Q2 2025 vs. $10.7 million adverse in Q2 2024)[226] - The expense ratio increased due to lower ceding commissions and higher expenses for consulting, software, and bad debts[227][230] Specialty Admitted Insurance Segment The Specialty Admitted Insurance segment reported underwriting losses, driven by declining earned premiums and adverse reserve development Specialty Admitted Insurance Segment Performance | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Underwriting Profit (Loss) (in thousands) | $(1,421) | $3,416 | $(1,727) | $4,202 | | Loss Ratio | 89.3% | 77.5% | 86.9% | 78.0% | | Expense Ratio | 23.3% | 7.5% | 19.7% | 13.4% | | Combined Ratio | 112.6% | 85.0% | 106.6% | 91.4% | - Net earned premium and fee income declined due to non-renewal of several programs, aligning with the company's strategy to retain minimal risk[232] - The segment experienced $0.7 million and $0.6 million of adverse prior year reserve development for the three and six months ended June 30, 2025, respectively[232] Corporate and Other Segment The Corporate and Other segment's operating expenses decreased due to reduced compensation, insurance, and audit expenses Corporate and Other Segment Operating Expenses | Operating Expenses | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Operating Expenses | $8,222 | $8,624 | $18,853 | $19,761 | - The reduction in operating expenses was mainly due to lower compensation, insurance, and financial audit expenses[233] Investing Results Net investment income decreased due to lower invested assets and yields, with net realized and unrealized investment losses reported Investing Results | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Investment Income | $20,516 (-17.7% YoY) | $24,931 | $40,524 (-14.8% YoY) | $47,563 | | Net Realized and Unrealized (Losses) Gains on Investments | $(352) | $(2,305) | $(1,723) | $2,278 | | Annualized Gross Investment Yield (Cash & Invested Assets) | 4.4% | 4.8% | 4.3% | 4.7% | - The decline in net investment income was driven by lower invested assets due to funding strategic initiatives and lower yields[234] - At June 30, 2025, 100.0% of the fixed maturity security portfolio was rated 'BBB-' or better (investment grade), with no credit-related impairments[239][57] Other Income and Expense Other income and expense primarily comprises non-operating legal and professional fees, partially offset by broker incentive rebates Other Income and (Expense) | Item | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Non-operating Expenses | $(1,008) | $(2,098) | $(1,571) | $(2,830) | | Broker Incentive Rebates | $1,163 | $993 | $1,998 | $1,701 | | Other Income and (Expense) | $234 | $(905) | $589 | $(726) | - Non-operating expenses primarily include legal and professional fees related to strategic initiatives and litigation[242] Interest Expense Interest expense decreased for both periods, primarily attributable to lower interest rates Interest Expense | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest Expense | $5,805 (-8.5% YoY) | $6,344 | $11,346 (-11.6% YoY) | $12,829 | - The decrease in interest expense is primarily attributable to lower interest rates[243] Amortization of Intangibles and Impairment of Intangible Assets Amortization of intangible assets remained consistent at $91,000 for three months and $182,000 for six months Amortization of Intangible Assets | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Amortization of Intangible Assets | $91 | $91 | $182 | $182 | Income Tax Expense Income tax expense on continuing operations decreased, reflecting lower pre-tax income and fluctuating effective tax rates Income Tax Expense on Continuing Operations | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income Tax Expense on Continuing Operations | $2,207 (-61.4% YoY) | $5,711 | $7,228 (-52.3% YoY) | $15,163 | | Effective Tax Rate on Continuing Operations | 30.1% | 28.3% | 31.0% | 28.5% | - Statutory tax rates are 0% for Bermuda and 21% for the U.S., influencing the effective tax rate[245] Reserves Gross reserves for losses and LAE totaled $3,076.5 million, with 74.4% attributed to IBNR reserves - Gross reserve for losses and loss adjustment expenses was $3,076.5 million at June 30, 2025, with 74.4% being IBNR[247] - Net reserves for losses and loss adjustment expenses were $1,089.2 million at June 30, 2025, with 64.1% being IBNR[247] Segment Gross Reserves | Segment Gross Reserves | Case (in thousands) | IBNR (in thousands) | Total (in thousands) | | :---------------------------------- | :--- | :--- | :---- | | Excess and Surplus Lines | $435,091 | $1,821,392 | $2,256,483 | | Specialty Admitted Insurance | $352,404 | $467,611 | $820,015 | | Total | $787,495 | $2,289,003 | $3,076,498 | Liquidity and Capital Resources This section covers liquidity and capital resources, including cash flow, dividend policies, debt, reinsurance, and credit ratings Sources and Uses of Funds Cash was used in operating and investing activities for the six months ended June 30, 2025, a reversal from the prior year Cash Flow Summary | Cash Flow Category | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Operating Activities (Excl. Restricted Cash) | $(26,926) | $59,883 | | Investing Activities | $(133,699) | $356,628 | | Financing Activities | $18,321 | $(31,488) | | Change in Cash, Cash Equivalents, and Restricted Cash Equivalents | $(141,688) | $340,537 | - Cash used in operating activities was impacted by timing of reinsurance settlements and lower premium collections in the Specialty Admitted Insurance segment[249] - Cash used in investing activities reflects efforts to enhance portfolio yield by investing available cash into higher-yielding assets[250] Dividends Dividend payments are subject to statutory limitations, with $64.3 million available from U.S. insurance subsidiaries in 2025 - The maximum amount of dividends available to the U.S. holding company from its U.S. insurance subsidiaries during 2025 without regulatory approval is $64.3 million[255] - Cash dividends of $3.9 million were paid on Series A Preferred Shares for the six months ended June 30, 2025[256] - At June 30, 2025, the Bermuda holding company had $20.8 million in cash and cash equivalents[257] Credit Agreements A new $212.5 million unsecured revolving credit facility was established, with $210.8 million drawn and compliance with all financial covenants - A new Credit Agreement provides a $212.5 million unsecured revolving credit facility, maturing June 12, 2028[258][259] - At June 30, 2025, $210.8 million was outstanding on the unsecured revolver[260] - The company was in compliance with financial covenants, including a maximum leverage ratio of 35.0%[262][268] Senior Debt and Trust Preferred Securities The company holds $15.0 million in senior debt and $104.1 million in junior subordinated debt, maintaining a leverage ratio of 28.5% - The company has $15.0 million of senior debt due April 29, 2034, with a floating interest rate[264] - Junior subordinated debt, issued through five Delaware statutory trusts, had a carrying amount of $104.1 million (net of repurchases) at June 30, 2025[265][266] - The company's leverage ratio was 28.5% at June 30, 2025, compared to 26.6% at December 31, 2024, remaining below the 35.0% maximum[268] Ceded Reinsurance Net premium retention was 45.2%, with property catastrophe exposure managed by a $22.0 million reinsurance limit - Net premium retention was 45.2% for the six months ended June 30, 2025[270] - The company estimates its pre-tax group-wide PML from a 1 in 1,000 year property catastrophe event would not exceed 2.5% of shareholders' equity[276][281] - Reinsurance recoverables on unpaid losses were $1,985.8 million at June 30, 2025, with material amounts from A.M. Best 'A-' or better rated companies, or collateralized[283] Amounts Recoverable from an Indemnifying Party and Reinsurer on Legacy Commercial Auto Book Indemnity agreements with Rasier and Aleka require collateral totaling $55.3 million and $26.5 million, respectively, for legacy commercial auto policies - Indemnity agreements with Rasier and a Commercial Auto LPT with Aleka cover legacy commercial auto policies[284] - Rasier and Aleka are required to post collateral equal to 102% of estimated obligations, totaling $55.3 million and $26.5 million, respectively, at June 30, 2025[285][286] - The company monitors credit exposure and requests additional collateral to mitigate risks if estimated losses grow faster than collateral balances[287] Ratings A.M. Best's financial strength rating for U.S. insurance subsidiaries is 'A-' (Excellent) with a negative outlook - The A.M. Best financial strength rating for U.S. insurance subsidiaries is 'A-' (Excellent) with a negative outlook[288] - This rating is the fourth highest of thirteen ratings and indicates an excellent ability to meet policyholder obligations[288] - The rating impacts the ability to attract and retain agents/brokers and influences the risk profiles of insurance submissions[289] Series A Preferred Shares The company has 112,500 Series A Preferred Shares outstanding, accruing dividends at 7% per annum, after a $37.5 million conversion - 150,000 Series A Preferred Shares were issued for $150.0 million on March 1, 2022[290] - An amendment on November 11, 2024, converted 37,500 shares to common stock, resulting in 112,500 shares remaining outstanding[291] - Dividends accrue quarterly at 7% of the liquidation preference per annum[290] Equity This section details common shares outstanding, share-based compensation expense, and equity incentive plan activity, including RSUs Common Shares Common shares outstanding increased to 45,895,335 by June 30, 2025, primarily due to RSU vesting - Common shares outstanding increased by 251,017 shares from December 31, 2024, to June 30, 2025, due to RSU vesting[292] Share Based Compensation Expense Share-based compensation expense was $834,000 for three months and $3.5 million for six months, with $6.9 million unrecognized Share Based Compensation Expense | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Share Based Compensation Expense | $834 | $1,553 | $3,494 | $4,228 | - As of June 30, 2025, $6.9 million of unrecognized share-based compensation expense is expected to be charged to earnings over a weighted-average period of 2.0 years[293] Equity Incentive Plans This section summarizes equity incentive plan activity, showing an increase in unvested RSUs, including new PRSU grants RSU Activity | RSU Activity (Shares) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Unvested, Beginning of Period | 885,173 | 751,254 | | Granted | 1,321,733 | 537,060 | | Vested | (362,216) | (268,993) | | Forfeited | (121,369) | (76,305) | | Unvested, End of Period | 1,723,321 | 943,016 | - RSUs granted in 2025 and 2024 included 620,108 and 231,492 PRSU awards, respectively[294] - No options were outstanding after the six months ended June 30, 2024, as all previous options lapsed[295] Underwriting Performance Ratios This section presents underwriting performance ratios for continuing operations, both excluding and including retroactive reinsurance impact Underwriting Performance Ratios | Ratio | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Excess and Surplus Lines Loss Ratio | 66.4% | 72.3% | 65.6% | 68.2% | | Excess and Surplus Lines Combined Ratio | 91.7% | 95.4% | 91.6% | 91.3% | | Consolidated Loss Ratio | 68.1% | 73.0% | 67.4% | 69.6% | | Consolidated Combined Ratio | 98.6% | 99.3% | 99.1% | 97.2% | | Consolidated Combined Ratio (incl. retroactive reinsurance) | 104.7% | 97.0% | 101.5% | 94.9% | - The consolidated combined ratio, including the impact of retroactive reinsurance, was 104.7% for the three months and 101.5% for the six months ended June 30, 2025[298] Reconciliation of Non-GAAP Measures This section reconciles non-GAAP measures, including underwriting profit, adjusted net operating income, and tangible equity, to GAAP equivalents Reconciliation of Underwriting Profit This reconciliation details underwriting profit, a non-GAAP measure, derived from income from continuing operations before income taxes Reconciliation of Underwriting Profit | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Underwriting Profit of Operating Segments | $10,286 | $9,843 | $21,638 | $29,120 | | Other Operating Expenses of Corporate and Other Segment | $(8,222) | $(8,624) | $(18,853) | $(19,761) | | Underwriting Profit | $2,064 | $1,219 | $2,785 | $9,359 | | Income from Continuing Operations Before Income Taxes | $7,327 | $20,189 | $23,336 | $53,149 | Reconciliation of Adjusted Net Operating Income This reconciliation adjusts GAAP net income to derive adjusted net operating income, excluding discontinued operations and investment gains/losses Reconciliation of Adjusted Net Operating Income | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income Available to Common Shareholders | $2,790 | $5,000 | $10,395 | $17,778 | | Loss from Discontinued Operations | $361 | $6,853 | $1,775 | $14,958 | | Losses and LAE - Retroactive Reinsurance | $7,299 | $(2,910) | $5,776 | $(6,072) | | Net Realized and Unrealized Investment Losses (Gains) | $278 | $1,821 | $1,361 | $(1,800) | | Other Expenses | $965 | $1,900 | $1,488 | $2,632 | | Adjusted Net Operating Income | $11,693 | $12,664 | $20,795 | $27,496 | Tangible Equity (per Share) and Tangible Common Equity (per Share) This reconciliation presents tangible equity and tangible common equity, non-GAAP measures, adjusted for preferred shares, goodwill, and intangibles Tangible Equity (per Share) and Tangible Common Equity (per Share) | Metric | June 30, 2025 (in thousands, except share amounts) | December 31, 2024 (in thousands, except share amounts) | June 30, 2024 (in thousands, except share amounts) | | :---------------------------------------- | :------------ | :---------------- | :------------ | | Shareholders' Equity | $492,558 | $460,915 | $541,791 | | Plus: Series A Redeemable Preferred Shares | $133,115 | $133,115 | $144,898 | | Plus: Deferred Reinsurance Gain | $65,281 | $57,970 | $13,047 | | Less: Goodwill | $181,831 | $181,831 | $181,831 | | Less: Intangible Assets, Net | $32,268 | $32,450 | $32,631 | | Tangible Equity | $476,855 | $437,719 | $485,274 | | Tangible Common Equity | $343,740 | $304,604 | $340,376 | | Tangible Equity per Share | $8.03 | $7.40 | $10.86 | | Tangible Common Equity per Share | $7.49 | $6.67 | $9.00 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses market risk exposure, primarily interest rate and equity price risk, with no material changes reported - The company's primary market risks are interest rate risk (fixed maturities) and equity price risk (equity securities)[309] - There have been no material changes in market risk from the prior Annual Report on Form 10-K[310] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes in internal controls over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[311] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[312] - The effectiveness of any control system is subject to inherent limitations, providing reasonable, not absolute, assurance[313] PART II. OTHER INFORMATION This part includes other required information such as legal proceedings, risk factors, sales of equity securities, defaults, and exhibits Item 1. Legal Proceedings This section incorporates legal proceedings information by reference from Note 8, 'Contingent Liabilities - Legal Proceedings' - Information on legal proceedings is incorporated by reference from Note 8, 'Contingent Liabilities - Legal Proceedings'[314] Item 1A. Risk Factors No material changes in risk factors occurred during the quarter ended June 30, 2025, compared to the prior Annual Report on Form 10-K - No material changes in risk factors occurred during the quarter ended June 30, 2025, compared to the Annual Report on Form 10-K for December 31, 2024[315] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds to report[316] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - No defaults upon senior securities to report[316] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable to the company[316] Item 5. Other Information No other information was reported for the period - No other information to report[317] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents - Exhibits include the James River Group Holdings, Ltd. Short-Term Incentive Plan, Amended and Restated Employment Agreement, and the Credit Agreement dated June 12, 2025[318] - Certifications from the Chief Executive Officer and Chief Financial Officer are included, along with Inline XBRL documents[318] Signatures This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report's submission Report Signatures The report was signed on August 5, 2025, by the Chief Executive Officer and Chief Financial Officer - The report was signed on August 5, 2025, by Frank N. D'Orazio (CEO) and Sarah C. Doran (CFO)[324]