James River Group Holdings, Inc. Q1 FY2025 earnings call

• Positive Developments: Concluded post-close purchase price adjustment for Bermuda Reinsurance segment with a small downward adjustment; de minimis prior year reserve activity; retirement of E&S segment leader with successor Todd Sutherland.
• Quarter Performance: Net income from continuing operations $0.18 per share, adjusted net operating income $0.19 per share. 11.5% adjusted net operating return on tangible common equity. Tangible common book value per share grew 6.6% to $7.11.
• Underwriting: First quarter combined ratio 99.5% (loss ratio 66.8%, expense ratio 32.7%). No catastrophe losses, minimal prior year reserve activity.
• Investments: Net investment income $20 million, slight decrease y-o-y due to reduced assets under management. New money yields average low to mid-5s, book yields around 4.4%.

E&S Segment

• First quarter combined ratio of 91.5% with $11.7 million underwriting income. New renewal submissions grew 6% to over 91,000, with growth in Environmental (26%), Manufacturers & Contractors (18%), and Small Business (10%). Average premium per policy declined 8.4%, but some divisions like Allied Health, Manufacturers & Contractors, etc., saw premium growth. March written premium growth exceeded 9% vs 2024.

Specialty Admitted Segment

• Gross written premiums declined 21% y-o-y. Focus on derisking, reduced primary commercial auto exposure, net retention on in-force portfolio less than 10%. Combined ratio 102.1% with small underwriting loss.

• Focus on long-term stability and profitability, growing E&S book profitably with initiatives on profitability, efficiency, and using innovation/technology.
• Anticipate improvement in expense ratio for 2025, expecting it to be close to last year's 31%.
• Redomiciling holding company from Bermuda to US expected to reduce effective tax rate and provide one-time benefit.

• Market volatility, fears of recession, economic policy uncertainty.
• Impact of new administration tariff policy on U.S.-based SME insurance and exposure to property/auto.
• Competitive fronting market environment with retracting reinsurance appetite, leading to request for loss ratio caps and larger nets.

Q: March written premium growth up 9%, shifting to smaller accounts. Through with re-underwriting?

A: Continues to be good portfolio management, constant process; want to grow E&S book profitably with initiatives, new E&S leader to drive growth.

Q: E&S reinsurance program renews end of June, visibility on pricing?

A: Will cover when next quarter's call is held, early days, everything orderly.

Q: Specialty Admitted premiums, onetime impacts?

A: Fronting market changes, reduced exposure, expenses down $2.3M; runoff of workers' comp programs led to normalization of book.

Q: Economic proposition of Specialty Admitted, run off entirely?

A: Fronting business deal-driven, lumpy; constantly evaluating businesses for scale and profitability.