JRVR James River

Sarah Doran CFO
Frank D’Orazio CEO
Cullen Johnson B. Riley Securities
Matt Carletti JMP Securities
Casey Alexander Compass Point
Meyer Shields KBW
Brian Meredith UBS
Mark Hughes Truist Securities
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.

Good day, and thank you for standing by. Welcome to James River Group 2021 Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer. [Operator Instructions]. today’s being that advised be conference recorded. is Please Instructions. [Operator hand over Doran. to I would first conference to like Sarah now your the speaker today, Please go ahead.

Sarah Doran

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

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

language will made any recent call over now cautionary do forward-looking and risk the with Executive other uncertainties, Form For Exchange yesterday’s please release and statements XX-Qs to a not filings discussion Frank have such D’Orazio, duty earnings Commission. the in of any undertake update of factors Group. risks Chief James River We see I of Form and turn regarding and we to the Officer the Securities and our reports most statements. forward-looking XX-K,

Frank D’Orazio

everyone, highlighted our of to appreciate value of the thank depth of returns for results strong operating robust River Thank To combined delivering marketplaces, service you, the Last our and for organization earnings the and relationships James and the return mutual excellent you growth the management second tangible continued Sarah. quarter, both share, continued and with joining the quarter, underwriting quarter while company of our recording resiliency a and continuing the look and our of friends on clients. reported results equity your sending per support, X your of for quarterly ratio night, runoff program you record portfolio. forward segment reinsurance very wholesale, while to and and call. XXXX auto by commercial morning, demonstrate quarters. needs underwriting the distribution Good XX.X%. previous in earnings $X.XX no adverse and of XX% experienced partnership profit in growth we the These diluted million a $XX.X in XX.X% impressive our of a irrespective very strength challenges recording partners, the development of The group

for Now our industry our of E&S, the consecutive The that conditions. business fact business July continue XXXX. maximize about for ability building demonstrate XXth change, change segment the they change consecutive over XX.X% market exceeded to company’s remain that QX compounded by earnings well. rate essentially for quarter was surpassed announcement, let should This but rate flat XX.X% full bringing month in favorable growing expectations the rates following place the at by where the to year its new second our In tremendously despite XXXX in a me our for matter, segments of current June expectation these the segment cumulative talk as bit to and period. recorded conditions quarter May, rebounded as an then production positive was that that rate GWP the XX.X%, core quarter into

view our profit believe the we our the trends, improvements More are exceed loss significantly us of future increase to importantly, business. we rate in cost achieving allowing margins

key Our very metrics remained production strong.

with policy renewal quarters. remained prior retention Our consistent

XXXX. ratio over was and XX% business hit activity up increased new policy Our and submission QX count

in we is E&S those that Excess a serves business the hold. in a strong double-digit the rate grew sector XX.X%. recorded premium growth For Property. include experienced and quarter, positive growth Allied investments our continues, XX Health, Overall, economy market, space smaller quarter end underwriting for expect and The that small our and Other as includes take the traction units Excess Casualty of performing which XX.X% the the divisions quarter and XX commercial actuarial in favorable we the particularly recovery just runoff ratio This from with a the development portfolio scale million to binding. contract benefiting out of our commercial domestic division our our for as and division, auto departments experienced with of critically, unit years, underwriting underwriting in of XX rate from of again, within $X.X prior indications. combined out

on. Moving

Specialty continues Not up while growth to and but Our Admitted retained we of expand only producing profitably. versus XXX% XX.X%. quarter, our ratio programs in premium prior, combined impressively of our a segment is have the XX.X%

program XX% remains XXXX. Growth in pipeline continue a increase activity to submissions, continues fee robust Our at of a submission a in income see over healthy as trajectory. QX positive that segment we flow including within

catch-up second new XX% increased stages, in policy year XXXX, unbundled also fee platform. as our various is onetime in quarter. performing diligence issuance new currently prior handling the and income a number a realized fee segment quarter while over opportunities marketing forthcoming the have of of on in claims such services income Excluding would The

growth Finally, $X Casualty of Unfortunately, rate no increases support. based rather than over we approximately adverse onboarding the in new Re and showed of million treaties on of primarily the in coming longer quarter, placements. existing segment experienced treaties of GWP development from the significant growth quarter, prior XX% underlying the XX% year substantively

loss to we in combined ratio for XXXX emergence XXX.X% the drove the accident optimistic margin the years, continue XXXX prior While remain embedded about of the the implied and quarter. year segment

continuing investments I Sarah? these to while opportunities of am in a the to the I on hand organization proud an specialty as larger, more furthering framework the in remiss be effort Sarah, enterprise culture of our E&S who carrier. make the group’s management management objectives remain risk indicate create year, how focused the to River profitable would to James continued if of committed the mention results have extremely in remaining and while back call underwriting front for didn’t Before our I to I employees

Sarah Doran

reported million quarter income the operating $XX.X of had net Thanks, Frank. night, profit. million $XX.X Last we and of for

augmented holding experienced profit, Admitted, story underwriting fronting favorable significant from mentioned, growth the Frank growth And XX.X% an a reserves. reserving the Despite the that Specialty core rate delivered full continue sum, year the scale and XXXX. XX over reflects in feel E&S meaningful building across E&S increases quarterly business, scale of on XX.X% prior the our average generated and for posted performance amount our quarters, expense benefit meaningful and organization, profit, combined As tangible year to quarter, by equity of our equity. return pricing, on and is year above rate XXXX of we was last growing and second savings the XX.X% are year few operating renewal a tangible taken the top business. we’ve current of quarter line the despite for strength that quarter ratio highest The XX% especially. underwriting record par accelerating accident we that uplift. ratio, we significant In we with points loss the In in

of quarter, X-point Our in in development benefit. $X.X quarter current across accident year from the a was to improve million ratio in second the down E&S year. years. had multiple combined XX.X% million, reserve overall XX.X% continued Reserve favorable We development favorable last to a $X.X of accident

frequency in quarter. treaties about X of including XX% was write continue We the We about decline see past Reinsurance that claims development Casualty expired that on to did a have in development of the and adverse this $X no million year. we XXXX longer material

Moving on to expenses.

business. premium mix expense see while dollar operating of ceding as to significant and premium to commissions, ratio in testament increased The in XX.X% group ratio of XX.X% same in of compared XX%. last expense The to E&S year growth approximately attractive absolute quarter. we Our as the to to for solid the second quarter across increased net well especially last year amount X% last management lines earned decreased compared Casualty This our XX% as a Excess is group quarter sensitive expenses the is as this segment. where quarter

ratio of quarter of between a growth ratio is than year to meaningfully sale that $XX.X X and any continue XX.X% The rate year. was the due at our somewhere second portion highly ratio to quarter, be expect decline our quarter the likely meaningful second X.X% in of second from While sensitive Admitted for X.X% the the this growth quarter but be The expected was and first build interest to we short-term expense investment Specialty our of expense for our about results to continue highly we our first loan income the from last can decline XX.X%. to rates will the segment. from In portfolio, in stronger full year-to-date in quarter results a our of bank reduction quarter benefited On the Net million, we this also sum, during quarter. expense of in the of XXXX. investments. occurred which variable. experienced scale

the going of take cash We’re balance our equity also proceeds were we’re May putting of we first the as from at to moment end carrying process in significantly the to offering than quarter, higher taxes. work. I’m on raised XXXX the a a

when Our reported having the on upon target remain And of we the XX% our tax for now and and XXXX Bermuda, our the majority to rate we X,XXX about in expect ratios claims around opportunistic and of of XX in $XXX highly the now earn up XX% rate relates in XXXX at as points a effective open which this were growth. of and months claims. the rate closed and claims the full successfully about claims sheet, more the XX.X% years. our ended effective with since operating and XXXX ourselves few XX%, where years which year. XXXX. account that year that the relate the XXXX to over balance tax runoff closed rate. auto is positioned commercial quarter, we We of first We’ve we X approximate reserves XX% to January about rate respectively, within we quarter earned hold auto combined. ‘XX X.XXx March did for tax well roughly X,XXX to In into strong reserves the open U.S. have the XXXX The on commercial I the million leverage large claims, pushing further we’ve income. relates than will year dependent income tax the of of closure that of We finally, remains put

cost as of kick of to claim a open $XX,XXX call current $XX,XXX. average end Q&A. per we on back And quarter, As the closing had second about I’ll that, of hand the per I’ll of sheet off to to reserves the our with -- claim balance compared Frank open

Frank D’Orazio

Thanks, operator.

questions. can open for we up think line I the


Instructions]. [Operator

Your of first question comes Securities. Riley Cullen from Johnson

Cullen Johnson

more The to first you remain commercial that question XXX pace auto constant so Has in you so? a week that would book. less in it the about kept expect noted closing claims if QX, over you’ve here? been investor or in presentation the And time

Sarah Doran

Cullen, a now, it’s Right question. Yes. great

XXX to XX the we recent between For a most quarter, week. claims anywhere closed

would slower So the slightly the it’s account the that runoff continue I the a it than runoff large data, the of slightly closing And to we time, slow think first above that open pace quarter further might expected. would down. of I away pace would that, the expect from move claims quarter. during we over XX% in of have say was I the than was about as the initial that

put So to book a continue I think us. very we behind as strong story the

Cullen Johnson

$XX,XXX quarter, kind or Okay. of to Great. recall, normal to -- the how just you number fluctuate think open be closing curious does closer you about cost rate? that that sit is helpful. run I That’s the if $XX,XXX figure? the then see prepared was may think you in fluctuation remarks, prior that would noted And a would that $XX,XXX I claim that per expected relatively at in we I’m that

Sarah Doran

$XX,XXX We right. were at exactly that’s quarter. at of the last Yes, end

to we’ve them, every closing at claims. we’ve And that expect of would cost now, I I that could that up. average got single Right claim we reserves open the we have mentioned us think we per close would So cost that go $XX,XXX claim. $XX,XXX roughly if open been

terms basis, for greener of narrow on some we those are early are would the expect similar looking those where at data for year accident XXXX. an to So in trajectory claims year where we years is time. And of to say, very over of we numbers the terms in I would

comfortable So expect we that trajectory, to with we’re that and would dynamic continue.

Cullen Johnson

for question about me. talk Okay. the development core little E&S a favorable your in in the -- bit quarter? then last Great. just just you Can what And

Sarah Doran


be comfortable that bright core think in we say, multiple continues development is given we very particular, just years, to E&S. handful very, would remarks. years mentioned kind tale of favorable Claims for the year our I a continuing a the last, years But given million any that in XXXX point saw frequency down be of think say, that tracks we would pretty bunch a very is I over effective feel well, saw there almost with the prepared time. I which the the accident over we XX% other as $X.X I in and of last year. X profitable in performing years of at us And to typical business. spot, X, in a


Your from next Carletti comes of question JMP. Matt

Matt Carletti

on you your curious May the rebounded levels? kind you where on was the levels back levels? maybe a new those of those of production if compared bit July provide June, color above and flat Can caught say, more comments market I that Frank, at some strongly. compare kind of QX business kind how to, Is it is. could then Just

Frank D’Orazio


bit color you a give you there. well, So me -- just little let of

to And happens quarter. grew core larger be XX% in year. quarter So we quarter It obviously, last about than the QX. it’s a X same

bar we the So XX And seen of quarters again, budget own growth before. exceeded higher But gets quarterly jumping we’ve positive obviously around quarter. expectations our after rate. the for rates

I think I to the referenced that dynamics down of it earlier. some boils

gives similar the than I in sense right that announced quarter posted performed June. QX like the So well. the despite we It July quarter the significantly of for And the the for being month come for new better after for said, some that tremendous. as we us was you that did June what in at a I’d say to May then was But rebound flat in was rate vein business growth May. we for we production flattish earnings.

Matt Carletti

things your And held running achieve definitely elasticity serve a going more just pricing guys those while, row. otherwise seeing of the then you price of Okay. to X rate pricing Are increase of Great. I helpful. any market, or those of question. kind in on a kind XX strong there. it levels had you Are just of kind sorts inflation of really for Is That’s other ratios of seeing some quarters sort kind in mean you the kind quote-to-bind have becoming any harder a of point increases? pricing of to continuing and support broadly?

Frank D’Orazio

our your begin been will pleasantly full eventually this that rate We’ve XXXX obviously, that consecutive X question. great can when a rates It’s change now. exceeded year or predict quarters change surprised And rate has you that course. But beginning begin not for more I in expect question, seen don’t see have we to that moderate difficult much it and reverse to to year. To regard. never

was that We’re activity not in up. seeing ratios. any our of Submission

Our hit was ratio up.

just So any seeing no our to we’re now. of right rates type ability of that the signs moderation relative to produce

disciplined continue particularly couple us, product like casualty sale I active. forces much certainly ahead is to That years impact several remains now, think favorable impact have there’s of carriers potentially may market remain and now, deployment. And quarters. right and could outside But outlook certainly the right conditions certain got next the quarters season in pretty hurricane even that lines. some soft me rate the to relative to some unchanged. Obviously, interest of for feels it of as loss limit we’ve


from Next Alexander Casey question of Point. Compass comes

Casey Alexander

moves Just off one to auto things pricing at reserves that some might that if transfer explore down book. do markets you exist any mentioned any made Has require had the of company would transaction was order auto book of transaction you that. addition on previously that to in to commercial capital opportunity pull an the commercial the path, there related a of that that looked kind the that loss was the kind to

where that helpful. company the some be could stands color on on Just

Frank D’Orazio

into so action the reserve took analysis we much for did. QX the a over, methodology Thanks We put that starting basically that the changing our question, charge taking approach, course, taking different and of Sure. we Casey. then,

comfortable makes I’m certainty consideration. mechanically structure we’ve taken and presented certainly. James since still I’ve That if at economically going that that’s So give overly serious not the cost said, If significantly is steps legacy key. with to and we’re prohibitive, we’re it been it River a with increases sense, that

party the the an there’s a on be to if even agreement needs remember, to assume ultimate, So liabilities. paid third still

to summarize we it’s conditions that just a outlined, a possibility my I comments find feel don’t that I a So I’ve here, structure necessity. still the makes sense guess, we feel on if but it’s


Mark of comes get question next Your from Hughes We’ll All Truist. just right. to Mark. back

comes Your next of from question Meyer KBW. Shields

Meyer Shields

excess those becomes curious I changed I’m question, the particularly assuming and you’re about surplus? in contribution guess that from trends Excess first can Casualty whether you And have overall? as bigger? the And talk loss

Frank D’Orazio


question, good -- Meyer. So

across frequency team you actuarial might analyzes our and that formal lines, study trend trends severity performs annually statutory as imagine. So a

We the is that extent insensitive. business to at trends we’re look exposure inflation also writing

exposure picking up We’re as well. that impact on

Our consideration the claims of identify we’re actuaries business duration associated take impact future look have trends on that that at into to products various but and to to the we segments write. the relative those of liability with seeking payments, in constantly

I that’s nursing Northeast New California York or homes couple contractors guess, just a or whether examples. of decide habitational So

adjust about And we that’s when that line increases necessary, high our index cost form and related And the rates granular so business. of whether very in we a by clearly, range. overall price on we range. social get a We fairly deem loss accordingly the at we’re mid-single-digit rate inflation. pricing it currently are of inflation producing the portfolio a trends trends multiple of But think level, or

the review and kind in now of of process going actually expectations of formal our that forward. right kind We’re setting doing

you that refreshing shortly. be we’ll So

Meyer Shields


reserve impact there with Re? in Second question, Casualty the just charge any ratio expense associated a numbers Was one.

Sarah Doran

scale the down either adverse in great or a sliding quarter, that scale treaties impact this move Often, have development didn’t Meyer. sliding particular. didn’t scale ratio impact have there’s expense a the a question, would in sliding That’s a No. that had

expense There no impact development a you from adverse was for in Re Casualty thank this quarter. asking So the ratio question.


comes question of Meredith UBS. Next from Brian

Brian Meredith

for A couple of ones you.

the I kind that XX%, it rate versus call it, are change? only, was that was going mathematically of you’re guess, growth E&S Is your declining out rate. figure down Just, XX% but trying growth or on your exposures XX%, given E&S to and exposures up

Frank D’Orazio

first No. few boils think Listen, down a I really to all, items. think of I it just --

only to past the We of rate very E&S due totaled in rating retention are or in we and -- in that date, line $XX,XXX a believe non-renewed for saw we we’re of the saw the segment that talked was the months. of following in were X little I policy nonrenewals impact being aware new month either ratios with impact. hit that cancellations our then flattish up. To the in-force rebounding of tied May, but canceled or events to business terms So submission first about quarter. quarters,

down The to roughly gets $XX,XXX your I policy new and probably worth of this the mentioning, point, per QX $XX,XXX to think, dynamic, XXXX business new is is in average maybe more premiums size came policy our quarter. been that’s driven past the units over that my binding business referenced And comments. this facility that, time significant by I small quarter again, and prepared in the in growth gaining really our in experienced we’ve traction other

So along investing that’s XXXX. been been bringing and an since that we’ve area in

steadily portal binding roll up Our with partners. distribution XXX continue to is per that again, been growing X,XXX portal visits to as contract to week, to access out our now we getting

we It’s keep We we’re insurers fairly continue network. earning because those happy tight. units to have to expand to attractive. growth cater the have ability are smaller low So that margins on certainly the touch. to And the the in box

kind some average new So some of impact that’s bringing just But is the going. we there down premium. business of like the where of

Brian Meredith

Got sense. Makes you.

with right view just segment, your workers’ happening of traditional Specialty Second curious, now? what’s And your on comp growth, in Admitted kind business? business What’s that terrific. your fronting more question, obviously

Frank D’Orazio

right? will declines positive go the costs, see is Comp term. is rating NCCI up loss We mixed, turn near slowing. their in the bureaus continues the soon in markets. indications outlook to from most pricing we Workers’ will still their of and do Yes. that believe still -- the reduce we prices rate and But competition see

states. and were making off we’re to inflection Sarah, an for honest say here But point that Workers’ we’re So we want down. coming, I rate Comp on to in filings risk right increases keep now, our quarter. say the me camp is about in the it XX% by business, several believes was individual

Sarah Doran

the Comp the you know we’ve -- -- point segment. Yes. within of But that in I between a total grown book And Workers’ that which an the growing of as Brian, had large years Comp and of was that have program think it. I know ago, program the X important GPW overwhelming majority segment. we there, as the too, X/X about rest business success is risk recently Workers’ individual is as that in the

through looked So against we concentration. the growth, diversify that really have

Brian Meredith

business, seems guess development at I then And to as get systems anything that with it book. I try reserve Frank, every respect you’re that or under or got there adverse to quarter, don’t control? you. here. Casualty look to on Got know, last we’ve Is basically question that like I the Re doing data

Frank D’Orazio

past, right? Yes. an primarily I in talked that quarter years. Well, we’ve old coming issue a million for $X charge adverse accident the there’s it’s the So about from guess

So it that million was we came treaties the primarily from the XX charge, years. that that no from adverse longer in And this the let’s came XX% of treaties in XX primarily say well, it $X to write. -- from quarter

longer So and accounting no some nonstandard are It exposure. hospitality some classes X by auto was book. underwritten that GL and contracting and treaties the

But claims. our So emergence ‘XX admittedly, in which years. not prior disappointment. different the to business is optimistic the Again, ‘XX a handling continue the I and be accident a very, this of very is about we’re year part

positioning our right? not the Bermuda. reporting going from claims, necessarily continue we’re but coming party, to They’re to to in a We’re us evaluate third


Hughes comes Mark Truist. Your next from Mr. of question

Mark Hughes

hear you me? Can

Frank D’Orazio

hear you, can Mark. We

Sarah Doran

hear you. Yes. can We

Mark Hughes

if hear about was you on have and is when what more profile I’d your in kind answer June question of that -- point. audio my cut more took where recently? curious might the to I out your those May out months been growth what Excellent. flat there’s be July, activity a the --

Frank D’Orazio

me if you. let replay for see I can the Well, tape Sure.

I produced fact growth quarter in what the So think Mark, to, flat XX.X% yes, was were for fact the I that we a rate that pointed we May. despite the

So And of June than the saw in same better trajectory was significantly we then that. type July.

expectations. with in more line much So our

Mark Hughes

Okay. this tie here perhaps perspective, might lately, your a point Good. broader into even loss last and you Re. last you’ve from the then around may months? And few What the question risk events made risk management, perspective global the a that you have underwriting and more these as emergence in Casualty changes seen from about to over the

Frank D’Orazio

Good Sure. question, Mark.

So relative listen, performance place rate particularly have let in we strong this, me James processes at monitoring. say and to River,

just it. We is the have tie reserve dives upon studies across business, we’ve looking monthly segment business. improve What would reviews. processes do and deep been very and though checking the discussions loss And segment and calls, underwrite into we good We how those and price I quarterly and take trends. regular we at organization broadly on say how we the

enterprise management. actuarial make So plays controls The better, the been make of register in reviewing risk in great. our overall individually. it a it We’ve practice role large risk all

processes And we our use adding that’s model, We’re go and and I continue governance and we our just iterative through expect process to think to it’s our to just economic continue going pretty cybersecurity process, relative much capital risk to ERM. through healthy framework. where an refine a where necessary, similar finding controls governance policies and our our framework we’re and how necessary. with to

Mark Hughes

think. might And Actuary, new [indiscernible]. changes then group anticipate Chief I you a Any you’ve got

Frank D’Orazio

new for X our Actuary. day Chief it’s Well,

months listen, So position I him focus executives just And organization. on a same remember, I he’s in all few thing they that a business just probably on ordered new to focus the hired But was when newly similar cards. expect a ago. joined

leadership and of new business we’re observe, the responsibilities. And take you you immerse you in of of support, segments So team your meet notes very listen, your course, you you yourself fortunate. the lot a and

of the quarter. Chief current isn’t Actuary Our retiring the end until

we all. in lines expect Dave he’s a lines, we but have expertise surprise very with that certainly. seen transfer. and workers’ knowledge orderly compensation, he’s is no is extensive So veteran grizzled going professional process with in notions Gelinne write coming them. But and casualty, property to it to a reinsurance Nothing listen, preconceived

Mark Hughes

the question Specialty that you should would grade final on What at? targeting operating What X then be for Admitted. that And of combined? be kind combined

Sarah Doran


obviously business combined very had the XX.X% that So a ratio. quarter the good at

Mark, growth any through I line move lot, percent seen think a in you’ve tough just it quarter-over-quarter. this getting where new any coming retentions. XX-ish of different given mix is and with programs, around you’re That’s a X business,

We’re still sub-XX% given moves kind but program. any the it retention, of in around on

probably basis those just be that trying prepared because pieces, with would on benefits all not that probably tough I in that’s as ratio. in just the We probably picture definitely recent is loss more a continue remarks. time. programs think bit to that rate a paint run these covering think the the about question, XX% ratio, and avoid business but I’m on. business throughout just XX% So But delta I the there. conceptually, of an it’s moving line to to had But was between combined trend some that somewhere have a running come to exact or over little I on in there fluctuation And kind the I going the my expense quarter improves some expense say then this a


please No to hand phone. the further Frank. Sir, ahead. conference go the back would I now to questions over like

Frank D’Orazio

this Okay. River Henry. making to listen time quarter discussion. and for produced profitability, Thank the you excellent growth James both you, to all and thank we morning’s of an

a for And group. in the a your very to the contributions to who at say when company like many distinguished week the end former I retirement. I’d COO, and best President moment you thank around Bob, many last for you wish I and know the of and all we our career speak long Myron, Bob I call, at industry retired your we the recognize to James Before end take after at River. the

Okay. again for a Well, you next today. We thank your day. you to great with quarter. time speaking again look Have forward


conference for today’s you concludes Thank call. participating. This

disconnect. now may You