James River Group Holdings, Ltd. (NASDAQ:JRVR) Q4 2024 Earnings Conference Call March 4, 2025 8:30 AM ET Company Participants Zachary Shytle – Investor Relations Frank D'Orazio – Chief Executive Officer Sarah Doran – Chief Financial Officer Conference Call Participants Operator Hello, and thank you for standing by. At this time, I would like to welcome you to the James River Group Q4 2024 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Zachary Shytle, Investor Relation ...

Group 1 - James River Group reported a quarterly loss of $0.99 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.33, marking an earnings surprise of -200% [1] - The company posted revenues of $126.71 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 32.49%, compared to year-ago revenues of $218.1 million [2] - Over the last four quarters, James River Group has not surpassed consensus EPS estimates, with only two instances of topping revenue estimates [2] Group 2 - The stock's immediate price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.45 on revenues of $188.8 million, and for the current fiscal year, it is $1.80 on revenues of $771 million [7] - The Zacks Industry Rank for Insurance - Multi line is currently in the bottom 45% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Performance - Net loss from continuing operations available to common shareholders was $92.7 million ($2.25 per diluted share) for Q4 2024, compared to a profit of $17.4 million ($0.46 per diluted share) in Q4 2023[1] - Adjusted net operating loss was $40.8 million ($0.99 per diluted share) for Q4 2024, compared to an adjusted profit of $12.4 million ($0.33 per diluted share) in Q4 2023[1] - Total revenues for Q4 2024 were $126.7 million, a decline of 42.0% compared to $218.1 million in Q4 2023[31] - Net loss for Q4 2024 was $64.8 million, compared to a net loss of $150.2 million in Q4 2023[31] - Adjusted net operating loss for Q4 2024 was $40.8 million, compared to an adjusted net operating income of $12.4 million in Q4 2023[31] - The total underwriting loss for the company was $(58,147) thousand in Q4 2024, compared to a profit of $3,465 thousand in Q4 2023[46] Premiums and Underwriting - Gross written premium for Q4 2024 was $358.3 million, an 8% decrease from $389.3 million in Q4 2023, with Excess and Surplus Lines contributing $280.3 million, a 2% increase year-over-year[4] - Net written premium decreased by 34% to $114.0 million in Q4 2024, down from $172.2 million in Q4 2023, primarily due to a 32% decline in Excess and Surplus Lines[4] - In the Excess and Surplus Lines segment, net earned premiums decreased by 43.3% to $87.3 million in Q4 2024 from $153.9 million in Q4 2023[39] - The Specialty Admitted Insurance segment reported a 31.7% decline in gross written premiums to $78.0 million in Q4 2024 from $114.1 million in Q4 2023[41] Ratios and Losses - The loss ratio for Q4 2024 increased to 111.4%, up from 73.9% in Q4 2023[31] - The combined ratio for Q4 2024 was 155.1%, significantly higher than 98.1% in Q4 2023[31] - The loss ratio for Excess and Surplus Lines was 118.4% for Q4 2024, significantly higher than 73.2% in Q4 2023, while the combined ratio increased to 159.8% from 94.2% year-over-year[44] - The consolidated loss ratio for Q4 2024 was 111.4%, compared to 73.9% in Q4 2023, with a combined ratio of 155.1%, up from 98.1% in the same period last year[44] Equity and Assets - Shareholders' equity per share decreased to $10.10 at December 31, 2024, down from $14.02 at September 30, 2024, due to net losses and an increase in common shares outstanding[5] - Total assets decreased from $5,317,250 thousand in 2023 to $5,007,076 thousand in 2024, a decline of approximately 5.8%[27] - Total liabilities decreased from $4,637,731 thousand in 2023 to $4,413,046 thousand in 2024, a decline of approximately 4.9%[27] - Tangible equity decreased from $485,608 thousand in 2023 to $437,719 thousand in 2024, a decline of approximately 9.8%[27] - Tangible equity per share decreased from $11.13 in 2023 to $7.40 in 2024, a decline of approximately 33.0%[27] - Common shares outstanding increased from 37,641,563 in 2023 to 45,644,318 in 2024, an increase of approximately 21.3%[27] - Cash dividends declared per common share decreased to $0.01 in Q4 2024 from $0.05 in Q4 2023[31] Investment and Strategic Actions - Full year 2024 net investment income increased by 10.8% compared to 2023, with the Specialty Admitted Insurance segment's combined ratio improving to 92.2% from 95.9% in the prior year[5] - The Company completed a $160 million loss portfolio transfer and adverse development cover for its E&S business, and entered a strategic partnership with Enstar involving a $12.5 million equity investment[2] - The company reported a loss from discontinued operations of $1,372 thousand in Q4 2024, compared to a gain of $170,211 thousand in Q4 2023[49] Reinsurance and Reserves - Reserve for losses and loss adjustment expenses increased from $2,606,107 thousand in 2023 to $3,084,406 thousand in 2024, an increase of approximately 18.3%[27] - Reinsurance recoverable on unpaid losses increased from $1,358,474 thousand in 2023 to $1,996,913 thousand in 2024, an increase of approximately 47.0%[27] - The impact of retroactive reinsurance on the loss ratio was 30.9% for Q4 2024, compared to (0.8)% in Q4 2023, indicating a significant change in reinsurance effects[44] Company Overview - The company operates in two specialty property-casualty insurance segments: Excess and Surplus Lines and Specialty Admitted Insurance[26] - Each of the company's regulated insurance subsidiaries are rated "A-" (Excellent) by A.M. Best Company[26]

Core Viewpoint - James River Group Holdings, Ltd. reported significant financial losses in Q4 2024, primarily due to strategic reinsurance contracts and adjustments related to preferred shares, while expressing optimism for growth opportunities in 2025 within the Excess and Surplus (E&S) market [1][2]. Financial Performance - The net loss from continuing operations available to common shareholders was $92.7 million, translating to a loss of $2.25 per diluted share, compared to a profit of $17.4 million or $0.46 per diluted share in Q4 2023 [1]. - Adjusted net operating loss was $40.8 million, or $0.99 per diluted share, down from a profit of $12.4 million, or $0.33 per diluted share, in the same quarter of the previous year [1][2]. - The total revenues for Q4 2024 were $126.7 million, a decrease from $218.1 million in Q4 2023 [28]. Premiums and Underwriting - Gross written premiums for Q4 2024 totaled $358.3 million, an 8% decline from $389.3 million in Q4 2023 [5]. - The E&S segment reported gross written premiums exceeding $1.0 billion for the second consecutive year, with a slight increase compared to the previous year [4]. - The Specialty Admitted Insurance segment saw a gross written premium decline of 31.7% in Q4 2024 compared to the prior year quarter [7]. Investment Income - Net investment income for Q4 2024 was $22.0 million, a decrease of 14.2% from $25.6 million in Q4 2023, primarily due to a lower asset base [9][10]. - The annualized gross investment yield on average fixed maturity, bank loan, and equity securities was 4.7%, slightly down from 4.8% in the prior year [10]. Strategic Actions - The company completed several strategic actions in 2024, including the sale of JRG Reinsurance Company Ltd. and entering into a $160 million loss portfolio transfer and adverse development cover for its E&S business [4]. - A new strategic partnership with Enstar was initiated, involving a $12.5 million equity investment and an additional $75 million E&S Top Up ADC [4]. Shareholder Equity - Shareholders' equity per share decreased to $10.10 at the end of Q4 2024 from $14.02 at the end of Q3 2024, reflecting the net loss from continuing operations and an increase in common shares outstanding [4][16]. - The company declared a cash dividend of $0.01 per common share, payable on March 31, 2025 [12]. Management Changes - The company announced the retirement of Non-Executive Chairman Ollie L. Sherman Jr., with Christine LaSala appointed as the new Non-Executive Chairperson [17][18].

Group 1 - James River Group Holdings, Ltd. will release its fourth quarter 2024 earnings on March 3, 2025, after market close [1] - An earnings conference call is scheduled for March 4, 2025, at 8:30 a.m. Eastern Time, accessible via phone or the investor website [1] - The company is based in Bermuda and operates a group of specialty insurance companies in two segments: Excess and Surplus Lines and Specialty Admitted Insurance [2] Group 2 - All of the company's regulated insurance subsidiaries are rated "A-" (Excellent) by A.M. Best Company [2] - For investor relations inquiries, contact information for a senior analyst is provided [3]

Core Insights - James River Group Holdings, Ltd. has successfully closed an adverse development reinsurance agreement and a $12.5 million common equity investment with Enstar subsidiary Cavello Bay Reinsurance Limited, as previously announced on November 11, 2024 [1] Company Overview - James River Group Holdings, Ltd. is a Bermuda-based insurance holding company that operates a group of specialty insurance companies [2] - The company functions in two specialty property-casualty insurance segments: Excess and Surplus Lines and Specialty Admitted Insurance [2] - All of the company's regulated insurance subsidiaries are rated "A-" (Excellent) by A.M. Best Company [2]

Group 1 - The analyst has nearly 14 years of experience in the financial industry, focusing on small and medium-cap companies in Europe, the United States, and South America [1] - The analyst specializes in mature industries such as mining, oil and gas, and real estate, and prefers to invest in business models that are well understood [1] - The investment strategy targets an internal rate of return of approximately 5%-7%, with a focus on M&A deals, deep value investments, and dividend investing [1] Group 2 - The analyst holds a beneficial long position in the shares of JRVR, indicating a personal investment interest [2] - The article expresses the analyst's own opinions and is not influenced by compensation from any company mentioned [2] - There is no business relationship with any company whose stock is discussed in the article, ensuring an independent perspective [2]

Core Insights - The article discusses the investment thesis for James River (NASDAQ: JRVR), emphasizing that potential upside requires patience and that the stock is attractively valued based on earnings and book value [1]. Company Analysis - James River is viewed as a bargain opportunity, particularly appealing to value investors focused on emerging markets [1]. - The company is positioned for long-term growth, with an emphasis on an owner-mindset approach to investing, largely ignoring macroeconomic noise [1]. Economic Perspective - The author expresses a shift towards an Austrian economic perspective, influenced by notable economists such as Henry Hazlitt, Friedrich Hayek, and Ludwig Von Mises [1]. - The article references the book 'Economics in One Lesson' as a significant influence on the author's economic thinking, highlighting the clarity and logic of its arguments [1].

Financial 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].

James River Group Holdings, Ltd. (NASDAQ:JRVR) Q3 2024 Earnings Conference Call November 12, 2024 8:30 AM ET Company Participants Zachary Shytle - IR Frank D’Orazio - CEO Sarah Doran - CFO Conference Call Participants Mark Hughes - Truist Securities Brian Meredith - UBS Meyer Shields - KBW Casey Alexander - Compass Point Research & Trading Operator Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the James River Group ...