Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- James River Group Holdings Ltd (JRVR, Financial) reported a profitable and stable first quarter of 2025, with a net income of $0.18 per share from continuing operations.
- The company successfully concluded the post-close purchase price adjustment process for its former Bermuda Reinsurance segment, resulting in a favorable adjustment of approximately $500,000.
- The E&S segment experienced strong market conditions, with new renewal submissions growing by 6% and setting a new quarterly record.
- The company achieved an 11.5% adjusted net operating return on tangible common equity, driven by E&S and investment portfolio returns.
- James River Group Holdings Ltd (JRVR) announced a planned reduction in its effective tax rate, expected to result in an annual expense reduction of $3 million to $6 million.
Negative Points
- Gross written premiums in the Specialty Admitted segment declined by 21% compared to the prior year quarter.
- The company experienced an increase in the expense ratio to 32.7% from 28.9% a year ago, although it anticipates improvement throughout the year.
- The fronting market environment has become more competitive, with increased requests for loss ratio caps and larger net retentions.
- The company continues to face challenges in the reinsurance market, leading to significant derisking of its fronting program portfolio.
- James River Group Holdings Ltd (JRVR) is experiencing elevated claim activity in Florida from its Manufacturers & Contractors book, attributed to changes in state statutes.
Q & A Highlights
Q: Frank, you mentioned March was up 9%, a strong month. Are you through the process of re-underwriting, and should March be representative of more growth for the rest of the year?
A: Frank D'Orazio, CEO: We will continue to manage our portfolio actively. Growth is a constant process, and we aim to grow the E&S book profitably. We have initiatives for profitability and efficiency, and with Todd Sutherland as the new segment leader, we expect to drive growth and diversification.
Q: Any visibility around pricing for the E&S reinsurance program that updates in June?
A: Sarah Doran, CFO: The program renews at the end of June, and we will cover it in the next quarter's call. Everything seems orderly, but we are in the early stages.
Q: Last quarter, you mentioned a spike in claims in Florida's construction sector. Has this persisted?
A: Frank D'Orazio, CEO: We continue to see elevated claim activity in Florida, partly due to a rush by plaintiff attorneys to file claims. Frequency is up, but severity is down by about 8% over the last 12 months. We are monitoring the situation closely.
Q: Could you explain the moving pieces in Q1 premiums for Specialty Admitted? Was there any one-time impact?
A: Frank D'Orazio, CEO: The fronting market has changed with increased competition and reinsurance market appetite retracting. We've reduced exposure, particularly in large commercial auto, and focused on managing expenses. Sarah Doran, CFO: There was no significant one-time impact, but the decline in premiums is due to runoff from workers' comp business.
Q: With low retained risk in Specialty Admitted, what is the economic proposition of being in this business? Are you considering running it off entirely?
A: Frank D'Orazio, CEO: Specialty Admitted provides diversification without much additional capital. We constantly evaluate all businesses for scale and profitability. The fronting business is deal-driven and lumpy, and we will continue to assess its value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
