James River Group Holdings, Inc. Q4 FY2024 earnings call

• Completed divestiture of Bermuda reinsurance operation, 2 legacy reinsurance transactions, and added a key strategic partner.
• Investment portfolio generated $93.1 million net investment income in 2024, a 10.8% increase over 2023.
• Favorable market conditions with record submissions in E&S, led by manufacturers, contractors, and general casualty.
• E&S accident year combined ratio was 91.8% in 2024; excluding legacy purchases, it would have been 89.3%. Loss ratio in 2024 was 64.3%, with slight rise in loss trend expected in 2025 but positive rate environment should offset.
• Production: Q4 E&S business grew 2% but excess casualty impacted; December monthly production had significant year-over-year increase.
• Reserves: E&S segment reserves increased due to higher severity in primary GC and higher frequency in manufacturers/contractors; monitoring construction claims trends in Florida conservatively.
• Specialty Admitted: Combined ratio 95.3% in Q4, 92.2% full year, expense ratio improved, gross premiums grew 8.3%.

E&S Segment

• 2024 accident year combined ratio was 91.8%; excluding legacy structure purchases, it would have been 89.3%. The 2024 E&S accident year loss ratio was 64.3%, 2.4 points higher than the previous year.
• Q4 2024 E&S business grew by 2%, but was negatively impacted by excess casualty; absent excess casualty, growth would have been 11.2% for the quarter across remaining 14 underwriting divisions. December's monthly production saw significant year-over-year increase.
• Reserves for the E&S segment increased by $38.4 million prior to sessions to the LPT ADC and $8.9 million on a net basis in the quarter, driven by higher severity in primary GC and higher frequency in manufacturers and contractors. As of year-end 2024, $116.2 million of reserve cover remaining.

Specialty Admitted Segment

• Q4 combined ratio was 95.3% and 92.2% for the full year with underwriting profit growth of 68.6% over the prior year. Expense ratio improved from 19.6% in 2023 to 14.4% in 2024. Gross premiums grew 8.3% in 2024.

• Expect mid-teen operating return on tangible common equity in 2025.
• E&S would have had 89.3% accident year combined ratio absent retroactive structures.
• 2025 loss picks assume slight rise in loss trend in excess casualty and general casualty, but positive rate environment should offset.
• Expect to continue attractive yields above 5% in fixed income portfolio in 2025.

• Industry reserve concerns and prolonged tightening of casualty reinsurance market could impact.
• Retroactive reinsurance transactions distort run rate performance of E&S operations.
• Construction claims trends in Florida monitored conservatively as they could be an issue.

Q: On submission growth and competitive dynamics in 2025?

A: Submissions up, healthy growth in several divisions like sports, entertainment, environmental, general casualty; competition in property market for larger accounts.

Q: On loss picks and trend in 2025?

A: Loss trend slightly higher across portfolio, primarily excess casualty and general casualty, but overall remains in low single-digit range