• Net Loss from Continuing Operations: $1.07 per share.
• Adjusted Net Operating Loss: $0.74 per share.
• E&S Segment Combined Ratio: 136.1%.
• Current Accident Year Combined Ratio for E&S Segment: 92.6%.
• Gross Premiums Growth in E&S Segment: 6% during the quarter.
• Submission Growth in E&S Segment: New submissions increased 10%, renewal submissions increased 12%.
• Renewal Rates Increase in E&S Segment: 8.6% for the quarter, 9.4% year-to-date.
• Specialty Admitted Segment Combined Ratio: 91.3%.
• Specialty Admitted Segment Underwriting Profit: $1.8 million for the third quarter.
• Net Investment Income: $23.6 million from continuing operations, an increase of 8.1% from the prior year quarter.
• Net Realized and Unrealized Gains on Investments: $4.2 million.

• Warning! GuruFocus has detected 2 Warning Sign with JRVR.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• James River Group Holdings Ltd (NASDAQ:JRVR) announced significant investments from two sophisticated investors, strengthening its financial position.
• The company has reduced its fixed charges, improving its balance sheet and allowing for better capital allocation.
• Submission growth in the E&S segment was robust, with new submissions increasing by 10% and renewal submissions by 12%.
• The E&S business experienced favorable pricing conditions, with renewal rates up 8.6% for the quarter.
• The Specialty Admitted segment produced a combined ratio of 91.3% and an underwriting profit of $1.8 million for the third quarter.

Negative Points

• James River Group Holdings Ltd (NASDAQ:JRVR) reported a net loss from continuing operations of $1.07 per share.
• The E&S segment's combined ratio was 136.1%, indicating significant underwriting losses.
• The company faced a $76 million reserve charge due to increased severity trends in certain lines of business.
• The expense ratio increased to 31.4% from 26.4% a year ago, impacting profitability.
• Gross written premiums in the excess property underwriting unit declined by 8% compared to the prior year quarter.

Q & A Highlights

Q: Sarah, you mentioned the group expense ratio would have been 27.8% instead of 28.8%. Is 27.8% a good number to expect going forward? A: I would say that 27.8% is a reasonable expectation, rounding up to 28%. We've never been super specific on that dollar amount, but that's the right area to think about.

Q: With the extended tail issues in other liability occurrence and product liability, what gives you confidence that these won't affect the 2023 or 2024 accident years? Is your pricing sufficient to account for that tail impact? A: The changes in assumptions were driven by severity and reported losses, leading us to increase loss development and trend assumptions by approximately 25% across major segments. Frequency was not the issue, and we see meaningful redundancy in the 2024 year. We have not taken credit for underwriting improvements yet, despite promising early indications.

Q: Can you provide a perspective on what you're assuming for casualty trend in your reserves and pricing? A: We have a high single-digit view of loss trend for 2024. We're finalizing our budget for 2025 and will refresh that view in a couple of months. Certain lines, particularly excess casualty, will be higher.

Q: Has the Specialty Admitted business been affected by recent developments, like the agreement with State National? A: We've had steady premium growth, with 9% growth in the fronting business in Q3 and 14% year-to-date. We continue to see solid growth from existing programs and have a pipeline of new opportunities. We remain cautious with security and unrated reinsurance.

Q: Is there any concern with Enstar's involvement in a merger affecting your agreement with them? A: No, it's not a concern. Our deal should close shortly, pending regulatory approval, with no specific contingencies related to Enstar's situation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.