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JRVR James River

Participants
Kevin Copeland Head, IR & CIO
Robert Myron CEO
Sarah Doran CFO
Randy Binner FBR Capital Markets & Co
Mark Hughes SunTrust
Bijan Moazami Compass Point Research
Meyer Shields KBW
Seth Rosenberg UBS
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2018 James River Group Holdings Ltd. Earnings Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. to host like Mr. today's now would introduce for your conference, I Copeland, Relations. of Kevin Investor Head may you Sir, begin.

Kevin Copeland

Earnings Jewel. welcome River XXXX to you, the Call. Thank Good James Group morning, fourth everyone, and Conference Quarter

will During current to to differ actual on expectations various be the and intentions, call, making statements. which are beliefs, are These that assumptions results uncertainties, materially. forward-looking and risks based statements subject cause we may

to and earnings we For make forward-looking uncertainties, and of Chief a Executive Myron, risks please regarding section of undertake yesterday's forward-looking such cautionary not XX-Qs and update President Factors James recent with do statements Officer any River the the over Securities statements. Risk filings other I Commission. turn in Bob most reports Form We release, Form see the duty now to language our Exchange and and any discussion will Group. of XX-K, and call the

Robert Myron

the call you CFO; Good is quarter comments The our and look thank additional some give on our I the future. very strong Head your morning color are we them our and everyone Kevin Doran, franchises few Bob of and to and our Copeland, for a Sarah CIO today. in me Sarah year earnings will see and then forward the improving Relations. Myron to and you getting of to and questions. This power with are I Investor conference and make joining

in capital XX And and our we results investments. with private management our our from in me the year loss with our return tangible our that the this expectations, we past, is now. on marginally as income teams, full commented last fourth that to so highest lot group year continued let profits operating and years. these below is part by expense XXXX picks for achieved has The investment were results equity underwriting across underwriting last For as so accident management. an segment had respect through achieved quarter XX.X% well something conservative We outstanding the great the both haven’t growth we franchise which good the a strong booking year do on achieved

have the premium along We highest policy the we efficient way regulators and manage to We to net the deliver compelling prudent to expectations on can a rating our and ratio company in with at agency, of equity time shareholders the meeting order capitalization. same while purpose this holders. ROTE

which marketplace of yield X% and our whole. We the many peers also dividend a which outpaces have specialty approximates P&C compelling as a

over also we our [indiscernible]. the standard averaged limits is testament This volatility high a four While limited have low a and deviation We've model, result which has XX.X% has retain property ROTE low high, exposure. been net public ROTE the our is where return, consistent. this to it but been and been around years have we

grew de the from only minimis. catastrophe our turned about out XXXX in worth topline fronting calendar which the Admitted growth Workers' due In from quarter in XX% have developed In last Auto Commercial fully E&S we XXXX to It continues million. are Auto year. another a growth XX%. of billion this In $XX the of XX% with is that property premium. the industry to the catastrophe increasing property good grew losses. we growth marketplace and outperformed Specialty to probably growth P&C same specialty in losses XX% X% basis, also Compensation $X for on we that losses our was the losses our our had relative growing We strong year Submission and be strong more growth. year which risk insured In Commercial had highlight largest nothing account. XX% individual again respect our to XXXX excludes and grew So quarter place segment a we is to than core be on to is

Our to million ago. the a from Admitted XX% grew fee $X.X the in same quarter quarter segment or the income Specialty year in

fronting have been the we a the Lastly, most that years part the as Specialty had strategy pipeline robust Admitted the in of have we deals, segment. potential probably XX have we pursuing of

In date binding profitably very am quarter deals, While of can grow we to fourth of to many due in strategic I we need to the from to this by large contract the that quarter grew $XX.X one continue the third in the million the work focus. we towards renewal these Casualty encouraged Reinsurance area in of shift quarter.

which the an year have calendar had and ratio of time and highlights. segment this the of underwriting ratio a full for in way we XX From by continue book XXXX. the years. ratio year had but been as all outstanding XX.X% segment's this XXs while full Admitted In has a in have the Specialty for in with ratio a the the we combined a a combined have combined we been XX.X we combined the the perspective of in combined business quarter this quarter, XXXX. quarter as we did first know we perspective planned E&S XX.X last refined to ratio months. ratio our is best the Casualty going year underwriting carefully I'll XX in the our over many XX% a back from combined shrunk strong Re For many cite profit of In history XX.X, few In we the had as results was you

bit a talk adequacy. me about Let reserve

our year reserve of consulting internal excess are studies that external studies through and point these actuarial show in and are our estimates. booked by done reserves actuaries end actuaries the our We our

Commercial whole. are comfortable are and a Auto, in shape We including the by good that segment as by for our division group reserves

has largest a past the adverse again accident the account So our same it in we We from from been with development was year. some in balance which quarter XXXX strong entered XXXX the reserve have sheet. did that place loss the

We very year. we in good Commercial are from overall behind development into as is next that confident now reserves our Auto us shape this are year that and in head

Commercial Auto largest we date had collaborative we an appreciative continuing this have and are long March effective relationship For of we insured. with our and with account XXXX X, the renewed of

are we organization. with XX% prior consists the mileage renewal about We perspective, continue this year's to renewal work pleased pricing an of well contract. in service the our to exposure the the of and of that received diligently across we account From

and same business writing. that as XXXX geographic in we to in we the However, in we XXXX amount this due expect coverage account the of are written did changes have in mix from about premiums net to

is highest pricing to Commercial the X.X% result in quarter E&S core have XX had up Now the Auto, we the in of the for outside years. in were renewal X.X% last year which and rates

business the power this be So the remained don't but of Specialty In larger with given strong. X.X% were pricing E&S trend example, pricing expiring business underlying largest such extremely several Admitted the quarter, pricing pleased accounts was core habitational In in Re auto to to pricing on is and three down, the benign our our continue And risks written we what food our the [indiscernible] that Casualty the increases renewal four is up times our loss and primary other rate we see group. pricing business. new commercial continued X.X%. been in up are In to as pricing was was segment capture delivery. always pricing for so admitted Workers' margins up very Compensation and had markets, where activity,

it across over pricing group With great about the margins feel So Sarah. overall to we healthy. remain our me insurance let turn and that,

Sarah Doran

Thanks everyone. and morning good Bob

For $XX.X profits the $XX.X million. $X.X net XXXX underwriting quarter generated million million, of made of our fourth and profits income reporting of we of operating

profit in than year it full operating was for of the has was million and company's higher it the our our been second $XX.X For XXXX highest XX% history.

third well improvement an in positions is annual and point returns. our a believe to best X.X came XX.X% the of attractive company's for expense peers quarter We our the ratio mean us of XX in ratio advantage and our expense annual XX% for the of points XX% year, results results. at history from Our

We year million $XXX from compared was full as continue the cash $XXX strong as year in to flow XXXX. last to million businesses flow our for operating million and cash enjoy $XXX

about This has bottom the above yield been and average consists investment we've portfolio. Our subset which have strategy. attributes. full of we in outside tangible our has well of which assets invested as tracking year. the largely investments the currently grown end us as above cash of from this portfolio equity per a as quarter income of market off in the at than year dividend and including for It This December's Unfortunately, share We've X% impacted contributor almost a net of performance million renewable approximately value common equity XX% $XX generated assets select flow portfolio pushed our we the or line Bob of and did sector two a noted. we note we've book fixes on small volatility through investment energy core been from year. total where investment key loss to which discrete represents have our partnerships as pace returns, income X% subset the grew of limited credits in less particular

per to shareholders at we're to leverage premiums to our X.X grew Over tangible per $XX.XXcomplementary equity XX to written of million, the quarter, ROTE book book our including the better increase value the equity months the focused course XXXX. tangible $XXX.X over common share. the with million We growing are quarter trailing $XXX.X ended end of target was an Operating at value tangible share on X. $XX.XX approximately of dividend tangible from or XX%

to effective to in and see rate X.X%. for was work our And shareholders. at our very continue attractive returns tax growth for organic put continue the finally business our reinvestment taxes, attractive is year to for look opportunities our our to and capital forward We

averages, going of our we impact continue this there be believe it rate in few points tax are that excess many a of to where forward historical similar While points came tax our to rate will year. on vary in to

turn Bob. that, back to it with So let me

Robert Myron

Thank you, Sarah.

in line Lastly, thank you our XXX producing our like prepared to XXXX continued concludes remarks, the in in results that would their strength of strong questions? hard these employees Operator, for XXXX. open we I all forward for please would and to look work

Operator

comes Binner FBR. from question [Operator Randy first you. with Instructions] Riley B. Our Thank

now is line open. Your

Randy Binner

Hey, reserves amount good the do development? you on level there why you. accident still was XXXX where question there versus has it morning, of amount year of good reserves that's there I the had considerable a year accident confidence a of know and Can XXXX thank you growth. the is to with have outline

Robert Myron

this Randy, Yes is Bob.

to the talked about I things we've the or in same that think it talked past. is

a causes and from You respect lot in in of underwriting we XXXX share the of state XXXX and terms actions development in know, exposures particular UM of from significantly and of particular it mitigated the XXXX. and came the lot from came related that development with rate the a UIM renewal to took the

So us. it's for we've the and thing borne have those underwriting actions that well really in same the out communicated past

Randy Binner

just to premium, then do one in you miles they'll said that that? Auto opening did of forward, post going your say be driven like and amount question of the you contract and Alright, quantify expect last related you you remarks Commercial but the did the specifically account, renewal similar a

Robert Myron

be is driven contract will had be month. said of number XX% which we approximate, miles Yes, of mileage ending expiring what will this the the I the in that approximately

Randy Binner

higher expanded coverage or increase? like by the of But limit with offset what, price that liability that's just offset

Robert Myron

said remarks I two amount guess bounced have that you Well, share mix it's that's from the as to it's those and and I'll really terms of really of well back would risk around take the of I through we It's in go say geographic the net what so the it. in years as just we line that things. prepared the

Randy Binner

you. thank right, All

Operator

you. our with question Mark SunTrust. next comes from Hughes And Thank

Your is open. line now

Mark Hughes

loss core very accident much. think Good like you seen your business. good XXXX? the in Thank What do you've for about you morning. growth year Presumably

that XXXX. accident When improve like more current favor seems year that going is put core to all should E&S You're may getting bit? we think together we your It in of shift pricing. a better mix in

Sarah Doran

I to into to think and Mark in that way the said I that year a go consistently is, picks trying we'll we've pretty the through that accident way XXXX we that’s are core. XXXX about put continue think that

accident year strong I we to to high, of think and want the we opportunity pricing growth we've book there, a conservative out got want but very great picks box.

see expect a So I that wouldn't big versus away. improvement XXXX over to right

Mark Hughes

of At that least sounds moving the logic those reasonable. parts

Sarah Doran

the cetera, is what year other accident just kind The mix but pieces I'm based of et on of particular. addressing were loss you saying in reasonable pick

Mark Hughes

Understood.

that think I line, the is improvement business steady the from we with have For for stick about sort within reinsurance some and your premium we may retain should perhaps written you XXs when think called high you so your - profitability outlook see profitable kind that combined of here more of to ratio? or

Robert Myron

Yes.

ultimately we're not we would overhead come expenses sliding give that team an since we more XXs we're a don't a focused guidance. that terms profitable commission scale business on from and we've there's terms of don't, are growing then has number, in the so like, or significantly as that brokerage offset does perspective we're been here line from is there priced to I'll here, right. scale lower lead plus then doing then book focus the with of calling pretty business ratio of you profitable loss good a that But and specific and and this accounts job layer able high premium most you and since know done the be and really to So think XXXX and really Mark But Bob. business basically of on focuses one focused The the XXXX it minus and of expect where on it really and to and number. that this team reducing the course this, I a the when basically the in and business up obviously of was so flat on to bit retain I so, top initially gets the little with

Mark Hughes

running Okay. Admitted high upper your exited of the current the And kind one XXs. final then question, in been mid up popped It number Specialty into year had XXs.

it loss good that comment you you pretty does as for XXXX? why mean move there environment up, on anything So I saw described think it. Any

Sarah Doran

business bit an that's say expenses good that But there. out and working how have the impact on it something we're we our in really book artificial to in would through It's expect a I XXXX. somewhat doesn't of continued experience approach a as we comp loss book adjustment of loss Mark. see and through of addressing particular formulaic

Mark Hughes

much. you Thank very

Sarah Doran

Thank for the questions. you

Operator

Research. comes next And you. from with question Thank Moazami our Bijan Point Compass

is line open. Your now

Bijan Moazami

rate your XX%, March you as Good that just it account premium I does a are didn't you're you provide morning XX% terms something are mean in And last to the rate providing guys driven is that of by carefully providing particular if that increase down order flat, in getting to to year, everyone. getting coverages to have compared that very is it flat want from that in volume understand of XX% starting account? that year? remain growth kind X last you're increase miles you from if

Robert Myron

as the go mix coverage providing the right. because clear, don't And No, the said of well I just it's assumption be what Bijan. rate we're as that's by in I to again, would make changes, geographic driven changes prepared to back really remarks that

we're whether rate it's the limits happy I this that we're driving But is share that the different or driven not renewal. thing really we're limits taking reiterate that right, a receiving that with that's change. that's pricing the So very of on the would

Bijan Moazami

higher Just low better rates in that to are miles space miles that understand more less and means a in rates. getting you

Robert Myron

that haven't me we so, I terms the before. we disclosed is of are liability result coverage back years that risk the terms about assume the perspective coverage the the Well something of never But of think that changes the but piece that in for risk liability of we physical as of and of part is drivers from take. been your of we talked provide, actually we've of a questions the share risk to as in well share there for level And the before as a as it we get coverage damage what, providing the and have taken coverage terms in damage as could that through on that that highest well be let we've in the it physical actually drivers.

for for taken years. through claims - contract. That shares this that of of the the side there the handling just in various - the liability risk up liability fee, basically a on through the we've And component we've moved so and of sort we're the then coverage. So years down

Bijan Moazami

the to on finally and last Admitted business fronting Also capital has as the year big Specialty Great. business compared the much how fronting how can the fees can also kind this and of become you takes? year charge that

Robert Myron

Yes, that's a great question.

the the in million minus here say years. to of what which the $XXX last premium zero plus from six to thing is So in first we've said about fronted similar is, I past gone we've or would

Sarah The a signed in However signed likes three a is it to can that deals new or you point be above as is, could a and no in quarter as or year well. could can material - some out this get number deals get quarter deals a lumpy. you couple new

pipeline. I it fronting And meaningfully expect it so, this get a We we to will larger to robust like is. that we grow have continue would than business.

I reinsurance made where of we gets progress, grow pretty it that to we've because risk deals. your these of one really you any we the capital as heavy manage more a credit you to to point carefully do of buying think light. XX% or have are you're we it generally good business amount credit continue because but it and it's of a, want It's see as out do reinsuring

retained net capital written to of at going a are recoverable, The come you or perspective, come have reserves. capital or risk XX% your from reinsurance whereas agency premiums rating look if from regulatory charges really So charges that's whether a important. business you lot through of for that the

than last is number capital deals. wider say pricing, those your organization market six a risk basis model to it's large we to generally four less fee at of I transaction can and allocated return say we looking impacts how around for example would a smaller number in one stuff that administer on and like of that of gross a that's in larger Right? needed than just very we lot that they return infrastructure. spread administer the generally - us a on any or really perspective. really a deal. and points fee targeting allocated on that we're really you that needed it's I get the it deal question something or from large So it’s fees numbers to would as it the marketplace. are be front scale compelling of compelling But are income has feel looking. these Obviously a might be not same really deal level not a where give would a on could endeavoring are And number to it that is people that and to that unless And of We're people we're much and meaningfully the has achievable still capital deal gross over the and lower all our and large a

Bijan Moazami

your do to item, fronting One admitted are business more you or be able guys business? last sea to expanding licenses

Robert Myron

we are also new licensure as XX do say are Yes, and filings licensure on companies respect. have always well looking expand to multiple work and filings continuing and to states. that in on But having we this E&S perhaps I but multiple would

we We licensure than of where where don't more situation, it have the exception a across broad States. we United by do. have It's

Sarah Doran

on for right both business, E&S almost now We have state, in and Bijan. licensure perspective that admitted an every

take got of to we've advantage looking So that. capabilities full and

Bijan Moazami

you. Thank

Operator

Meyer our Shields you. KBW. question with Thank next from And comes

Your line now open. is

Meyer Shields

burst, the if fees apologize counting morning damage going Good of just closure. Surplus I thanks to expect to you payments you're some all. for down on the Great, be within should the and line segment Excess we Bob, come retaining physical

Sarah Doran

we on decrease. would I we would necessarily to that but point, I to I don't continue not, that Meyer think were expect there fees the said

we for same the a that's down through income income premium this in the beginning are there's we continue even to XXXX not would goes year not that of is from decreased. the fees at now within over to the in we say bit that the materially given a through Just and you and not fee and a and to in were about and accounting fee it impact lag the that's XXXX talked missed, of be premium and year of But perspective come that really way course business be as the dynamic E&S change expect represented a last in to accounting instead.

Meyer Shields

rate helpful. the quarter fourth this I thanks. there's was That's Okay, of that suffices from quarter were little of lines fourth core business now? some a really function in between, a hoping little quarter's are in now on, last you that's increases, bit I E&S seasonality rate a renewing increases comment the think lag this

Robert Myron

several pricing and about on had fourth that lines. renewals can rate and in renewals of in General certain all, the Yes, Excess terms renewed overall It or it get to and got because the very definitely But of within that good it increases of It increases and actively we we think let example lumpy feel Meyer can new and sort surplus of on to I the I as well. speak, other did mean, I some increases, the divisions business where Casualty seek business excess rate rate was be of at because also Casualty eight that's for in environmental be divisions increases across think twelve dates there. well. substantial was this. me as of quarter continue rate the meaningful broad. certain pretty we of I would obviously with lead say we book

I during of the point did the on the why it hitting does, think which around you're it year. is course yes, but So bounce

overall way is on have Sometimes many harder, in the as don't market division basis. much a in rate where the if of that blended you won't a renewals as you increases see

as bit that QX quite perfect Healthcare, had be and a that business tendency of - to example new some renewal Now dominated. Allied of a has I think a we

these to You year know and the it's of of larger sort they they're terms accounts renew. when January, because in tendency be oriented have calendar more

And just so, course the if renewal been large that increase rate remember but smaller had of in year the premiums throughout you division, renewal we a there there's right.

in way a So yes so of to I long less, that's saying guess your that's weighs of question. sort

Meyer Shields

Okay, unfavorable guess the within has core? again now And that's there helpful Auto I reserves it help. or question Excess within Surplus final of then elements any been & outside favorable Commercial any was

Sarah Doran

No, there was not. We just had Commercial the $X.X in million year of adverse development Auto. from the XXXX accident

Meyer Shields

Okay. Thank you so much.

Operator

Thank you. UBS. from And with comes Brian question our Meredith next

Your line open. is now

Seth Rosenberg

Hey, stepping Seth for good is morning the Brian. guys. This Rosenberg in

in why states these to to to in more So years changes act benefit vehicles the trying pricing different 'XX from cameras the back language see said renewed, Randy's went underwriting. whether I are 'XX question you Bob these you the policy two the terms or days? Auto, just mentioned or behaviorally maybe see and but also understand might you or think r year you I'm up versus in certainly Commercial starting a as

Robert Myron

Well, that's just were terms pricing and of - shares share what state varied increase we do that XXXX well of that as there and an then been I past, then what we, the no had the there, started that that priced but state we took had the the in a being Florida separate was overall really Florida to for separately rate And state for there some in an like important was know was to most difficult, then you longer so repeat there well. and we've entire - year. think renewal said the mention to as specific thing we was by we that

Seth Rosenberg

that how that terms between the - Okay, understood. the is terms two didn't change policy of the limits years? in structured But the what and

Robert Myron

it share limit the because take, terms we're that retaining. we our of Well, that guess net does in I of

Seth Rosenberg

any had And Okay type hear it's maybe Commercial in involvement, talk number you that they train this heavy that guys trucking [ph] book? where the of on development maybe, marketplace vehicles. Are in quarter, higher you your you. and then broader helpful. That's trains limits. more adverse equipment that after some understood. a seeing Thank There's Auto the going more impacting companies see picture you know of

Robert Myron

say are. is account think So you this wouldn't really I business reason that this [Audio Yes, this Gap] and the that question? - mind know repeating would we It's is, I you

Seth Rosenberg

a loss we're so seeing broad had higher kind just this takes Sure, quarter about, of Auto. of charges some on and Commercial companies number how picture reserve you talking

Some involvement companies particularly just focused curious lawyers higher attorney that? the you your space more I’m and about more have have see limits, so on dynamics can do trucking spoken book of any where you target the in

Robert Myron

do. wouldn’t Yes, say I that we necessarily

reasonably this you traditional other commercial that or think auto really don’t the accounts. things I is same being book by think that more different than taxi cab are trucking hearing necessarily I related it’s driven from people.

uninsured some and that again then and the motors here. actions in losses I in just really so think XXXX out took we and meaningful that’s on coming and it’s uninsured story and priced so and exposure think was of I really where the time contract XXXX in corrective

Seth Rosenberg

year way this so right thinking deploying previously versus deploy that to then think versus of And you’re it? that sort of that one right have thinking guys that’s about strategy. you’re you of I ROTE sort thanks. know great about the terms Am about the dividends, gears, Okay, the threshold no targeting shifting about last I spoken capital of sort one return XX% returning special the in how

Sarah Doran

this sorry is think, Sarah Doran. I

We’d especially [indiscernible] rather we're and we effective consistently at great given and we pay common just for continue We an highlight managing various opportunity on above kind especially us core the I in I capital dividend if better is that level. dividend we ordinary. that second on feel to our feel a effectively for on and of great XX% average special X% capital like what a work environment we think to think is like places. like what we’re do we're our commented to or capital call through XXXX seeing already, equity other return focus is - that efficiently said we guidance intangible put ordinary had that the to to through as management we’re and strategy in than the the

Robert Myron

And we dividend a our had I to make we too declared was point clear is normally a special third that results. want just released quarter would one have when been when dividend

Sarah Doran

in and that's do quarter, don’t quarter Yes, ago, fourth good point yep. the yes. that We a this

Seth Rosenberg

Got very guys you much. it, okay thank

Operator

from you. Instructions] [Operator Our next be will Thank of SunTrust. Hughes question Mark

now line Your is open.

Mark Hughes

answered. My you. been Thank have Thank questions you.

Operator

you. Thank

Robert Myron

to early technical you in everyone right, participation. We All the May. your for call Thank thank forward you. appreciate conference our difficulties for joining [Indiscernible] talking you and today. look will we

Operator

and Everyone you This participating and may for great conclude have gentlemen, day. thank today’s program today’s conference. Ladies a in disconnect. all you does