James River (US:JRVR)2023-05-06 15:51Financial 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]